Flexibility is the main advantage of a revolving credit facility as it gives the business easy access to cash. Revolving credit facilities also only charge interest on the cash that’s been withdrawn rather than the whole credit limit. However, the lender may charge a commencement fee as compensation for offering open access to a loan where interest payments are only activated upon withdrawal.
In addition, a revolving credit facility will often include a cash sweep provision stipulating that excess free cash flow will be used to pay down any outstanding debt. The benefit of this is that the business will make faster repayments, but this may also be a potential disadvantage as cash reserves can’t be used for other purposes (e.g. distributing cash to shareholders or making large purchases).