Revolving Loans
A revolving loan is a loan that can be drawn down, repaid and then re borrowed repeatedly over the life of the loan. A revolving loan can provide flexibility and cost-savings because the borrower only draws down cash when needed and is permitted to repay that cash at any time in order to reduce interest costs. Typically, lenders charge borrowers a fee on the balance of undrawn funds. However, this fee is usually significantly less than the interest cost on drawn funds. Many different types of companies use revolving loans. In particular, revolving business loans are common among retailers, wholesalers, distributors and manufacturers.
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