Revolving credit / Rechargeable credit

A revolving or top-up loan allows you to re-draw previously drawn and then repaid loan amounts until the end of the term.

We talk about a revolving credit if the borrower has the option to repay the previously drawn loan amount against the line of credit and then draw it out again. In the case of a revolving loan, the availability period and the length of the term are the same.

A revolving credit is typically a flexible line of credit provided for the purpose of financing working capital, where the loan is drawn down and repaid according to the borrower 's needs and at the initiative of the borrower. 

The revolving credit may be suitable for financing working capital needs for which the need for financing does not exist permanently. This could be, for example, the financing of the company's stock of materials and goods or trade receivables. This may be necessary either seasonally or in unique situations. A good example of the latter is the provision of funds related to the pre-financing of a successful tender.

The great advantage of a revolving line of credit is its flexibility and the fact that interests only has to be paid on the loan amounts actually used. 

In terms of its operation, a revolving credit is also an overdraft. This can be an effective means of ensuring adequate liquidity. The line of credit linked to the company's bank account can be used in all cases where there is not enough money in the account to fulfill the liabilities. You should know here, however, that if money arrives on the account, the used limit will be refilled first. You can withdraw money from the credit line again and again until the end of the term. Here, too, you only have to pay interests on the amount that our company actually used.