A revolving credit agreement is a guaranteed line of credit in which a bank makes a binding commitment to provide a business with funds up to a specified credit limit at any time during the term of the agreement. In exchange for the bank's commitment, the firm pays a commitment fee based on the unused funds.

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As stated in the definition, a revolving credit agreement is a guaranteed line of credit where the bank commits to providing funds up to a specified credit limit and the business pays a commitment fee based on the unused funds.

A Revolving Credit Agreement Is a Guaranteed Line of Credit