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In finance, a “revolver” or “revolving loan” allows a business to borrow money as needed up to a predetermined limit. The business can repeatedly borrow, repay, and borrow again as long as it remains within the limit. Interest is typically charged only on the amount of money borrowed at any given time, not the entire credit limit.


The phonetic pronunciation of “Revolver” is /rɪˈvɒlvər/.

Key Takeaways

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  1. Revolver is often considered one of the greatest albums in the history of rock music, marking a pivotal moment in the Beatles’ evolution as artists.
  2. It showcases the Beatles’ experimental use of studio technology, including automatic double tracking (ADT), backward tape effects, and varispeed recording.
  3. Revolver embodied a wide range of styles and influences, from Indian music in “Love You To” to the avant-garde inspired “Tomorrow Never Knows” , reflecting the band’s exploration of new musical territory.

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In business and finance, the term “Revolver” or “Revolving Credit” is critical as it gives businesses and individuals a higher degree of liquidity and flexibility in their spending. It refers to a credit agreement that allows the borrower to draw, repay, and redraw loans on a rolling basis. Unlike a term loan, where all money is received upfront and repaid in installments, a revolver enables borrowers to adjust their borrowing amounts based on current needs and cash flow. This flexibility can be especially beneficial to businesses dealing with seasonal fluctuations, working capital needs, or unexpected expenses, thus helping manage overall cash flow more effectively and potentially reducing the cost of borrowing.


A revolver, or revolving credit facility, is a type of credit arrangement that offers a borrower high flexibility. Its key purpose is to provide companies with access to funds whenever needed, making it an essential tool for managing a business’s short-term capital needs. This financial instrument allows companies to borrow repeatedly up to a set credit limit without having to reapply for a new loan each time, thereby assisting in smoothing out any cash flow inconsistencies or addressing unexpected expenses. Since the interest is only paid on the borrowed amount and not on the whole credit limit, it is a cost-effective substitute for conventional loans.The utility of a revolver extends beyond the scope of just short-term capital needs. It is also used as a backup source of funding, thereby ensuring financial stability in scenarios of economic downturn or unexpected financial emergencies. Companies may engage in strategic borrowing using this credit facility, capitalizing on opportunities for expansion, or financing regular operational needs like payroll or inventory acquisition. Essentially, a revolver balances out the liquidity and facilitates the smooth functioning of a company’s day-to-day operations.


1. Credit Cards: The most common example of a revolver in the financial world is a credit card. Cardholders can borrow money up to a set limit, repay part or all of it, and then borrow again. The cycle of borrowing, repaying, and re-borrowing can continue as long as the customer stays within their credit limit and meets the minimum repayment requirements. 2. Line of Credit: Another example of a revolver is a line of credit obtained by a business from a bank. The bank sets a maximum loan amount and the company can draw upon that amount as needed. The business just pays the interest on the amount borrowed and can repay and reborrow as long as they don’t exceed the maximum limit.3. Home Equity Lines of Credit (HELOC): This is another very common example of a revolver. A HELOC enables homeowners to borrow against the equity in their property. Similar to a credit card, the borrower can access funds up to a set limit, repay it, and borrow against it again. This can be exceptionally useful for home improvements or unexpected costs.

Frequently Asked Questions(FAQ)

What is a revolver in finance and business?

A revolver, or revolving credit, is a type of credit that does not have a fixed number of payments, unlike installment credit. It is an arrangement which allows for the loan amount to be withdrawn, repaid, and redrawn again in any manner and any number of times, until the arrangement expires.

What is an example of a revolver?

An example of a revolver would be a credit card. With a credit card, you have a limit of how much you can borrow. You can borrow and repay as often as you like, as long as you don’t exceed your limit.

What industries commonly use revolvers?

Essentially all industries can and do use revolver loans. They are particularly common in sectors like construction and retail, where companies have fluctuating cash flow needs.

How is the interest calculated for revolver loans?

The interest on a revolver loan is generally compounded monthly on the drawn amount. Any amount that is repaid does not accrue interest.

What are revolver commitment fees?

Revolver commitment fees are charges that a lender may require a borrower to pay in return for unused credit. In other words, they’re fees for the convenience of having money available to borrow.

Can a revolver credit limit differ from the initial amount?

Yes. Borrower and lender can agree to change the credit limit of the revolver. This can be an increase or decrease, dictated by both parties’ circumstances and the borrower’s creditworthiness.

What happens if the revolver is not paid back within the agreed time frame?

If the company does not pay back the borrowed amount within the agreed time-frame, the lender has the right to demand immediate payment of the outstanding balance and any accrued interest. This situation can also impact the borrower’s credit history negatively.

Is it possible to renew a revolver once it has expired?

Yes, Revolvers may be renewed or rolled into a term loan at the borrower’s discretion, subject to the lender’s approval and credit policies.

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