Revolving Credit Facility (Revolver)
Definition
A revolver is a committed credit line a company can draw, repay, and redraw as needed — the corporate equivalent of a credit card. It sits at the top of the capital structure (typically first-lien, generally pari passu in lien priority with the term loans) and funds working capital swings and general liquidity.
Economics: the borrower pays an undrawn commitment fee (often tens of basis points) on unused capacity and a floating spread over SOFR on drawn amounts. Asset-based revolvers (ABLs) cap availability at a borrowing base tied to receivables and inventory.
In LBO models the revolver is the model "plug": it draws automatically when cash flow is negative and repays first when cash is available. Leveraged revolvers often carry a springing maintenance covenant that is tested only when the revolver is drawn beyond a set percentage.
Why interviewers ask
"Why does the revolver come first in the debt waterfall?" and "What's the plug in your LBO model?" are classic technical questions. Modeling tests also check that your revolver logic (draw on shortfall, sweep first) works correctly.
Related terms
Interviews don't test definitions — they test recall under pressure.
Drill 1,500+ real questions with spaced repetition. Free to start — 10 reps a day on the house.