Debt collection reduces the available balance, while debt payment increases the available balance. The financial institution may review the revolving credit facility on an annual annual annual. When a company`s income decreases, the institution may decide to reduce the maximum loan amount. It is therefore important for the entrepreneur to discuss the circumstances of the business with the financial institution in order to avoid a reduction or termination of the loan. The loan approval criteria depend on the phase, size and sector of activity of the company. The financial institution generally reviews the entity`s annual accounts, including the income statement, the capital flow account and the balance sheet, when deciding whether the entity can repay a debt. The chances of the loan being approved increase if a business can demonstrate consistent income, high cash reserves, and good creditworthiness. The balance of a revolving credit facility can be between zero and the maximum allowable value. Subject to the conditions set out in this Agreement, the borrower may use a retirement facility under a Senior Facility Arrangement in which it participates, in accordance with the terms of the applicable Senior Facility Arrangement.
A revolving credit facility is a form of credit granted by a financial institution that allows the borrower to withdraw, withdraw, repay and withdraw. A revolving credit is considered a flexible financial instrument because of its repayment and redemption. It is not considered a temporary loan, since the facility allows the borrower to repay or re-contract the loan for a given period of time. In contrast, a fixed-term loan provides funds to a borrower, followed by a fixed payment plan.