---
title: "What Is Revolver?"
term: "Revolver"
description: "A revolver is a revolving credit facility — a loan line a company can draw, repay, and redraw within a limit, like a corporate credit card backed by a bank agreement."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/revolver
---

# What Is Revolver?

> A revolver is a revolving credit facility — a loan line a company can draw, repay, and redraw within a limit, like a corporate credit card backed by a bank agreement.

**Revolver** (revolving credit facility) is a committed loan line a borrower can tap repeatedly up to a maximum, repaying and re-borrowing during the facility term.

### How it works

A bank commits $10M revolver for three years. You draw $3M for inventory, repay $2M after collections, draw $5M next quarter — outstanding balance never exceeds $10M without amendment.

Interest is paid on **utilized** amounts; unused lines often carry a **commitment fee** (e.g., 0.25–0.50% annually on undrawn capacity). [Venture debt](/glossary/venture-debt) packages sometimes include a small revolver alongside term loans for working capital.

Covenants may require minimum cash, revenue milestones, or borrowing-base formulas tied to receivables. Breach can block new draws or accelerate repayment — read springing covenants that activate when cash drops below thresholds.

In LBOs, revolvers sit beside term debt and bonds as the liquidity layer for payroll spikes and bolt-ons.

### Why it matters

- **Founders:** Treat revolvers as insurance, not permanent funding — utilization raises interest expense and can trigger investor scrutiny.
- **Investors:** Monitor covenant headroom; heavy revolver use near limits signals liquidity stress before [runway](/glossary/runway) models show it.

### Common mistake

Assuming an undrawn revolver equals cash on hand. Banks can refuse draws or renegotiate if covenants fail or business performance deteriorates — commitment is conditional.

### Related ideas

See also [venture debt](/glossary/venture-debt), [capital call facility](/glossary/capital-call-facility), [cash flow](/glossary/cash-flow), and [event of default](/glossary/event-of-default).

## FAQ

### What is a revolver in simple terms?

A revolver is a standing credit line. Borrow up to a cap, pay interest on what you use, repay when cash comes in, and borrow again without renegotiating each time. Unused capacity often carries a small commitment fee.

### Why does revolver matter?

For founders, revolvers smooth seasonal cash swings and can extend runway between equity rounds. For investors in buyouts, revolver availability supports operations and acquisitions without constant equity injections.


---
Source: https://venturecapitaltracker.com/glossary/revolver