Hedge Fund Glossary

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Cash Flow Revolver

a Revolving Facility that provides the Borrower with a line of credit up to a fixed amount, in contrast to an asset-based loan, which is based on the value of certain categories of the Borrower’s assets as of a given time. A Cash Flow Revolver typically contains more Financial Covenants than an asset-based loan, but also has fewer ongoing reporting requirements. In a Cash Flow Revolver, the Lenders will focus on a Borrower’s ability to cover debt service by generating cash flow, whereas in an asset-based loan, the Lenders will focus on the value of certain categories of the Borrower’s assets, especially the liquidation value of those assets, relative to the Lenders’ exposure under the loans (this is known as Collateral coverage).

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