A revolver is a credit line the company draws when cash runs short and repays when cash comes back, like a business overdraft. In a model it keeps cash from going below a minimum without anyone typing a plug.
Each year, work out the cash available after everything except the revolver:
cash available = opening cash + cash flow - interest - scheduled repayments - minimum cash
- If it's negative, draw that amount.
- If it's positive, repay, but never more than the revolver owes.
One formula does both: =-MIN(cash available, opening revolver). A shortfall of 34 gives a draw of 34; a surplus of 29 with 35 owed gives a repayment of 29.
Charge interest on the opening balance. Interest on the closing balance would depend on the draw, which depends on cash, which depends on interest: a circular reference. Opening balances avoid it, and timed modeling tests expect it.
Revolvers have a limit. When the shortfall is larger, the draw stops at the limit and cash falls below the minimum: a breach to flag.