<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>chadash</author><text>A revolving line of credit with a bank. Basically, bank says you have (to make up some numbers) revenues of $15,000,000&amp;#x2F;year and profits of $5,000,000, so we think it would be pretty safe to lend you &lt;i&gt;up to&lt;/i&gt; say $1,000,000 that you can borrow whenever you want to run your business and you&amp;#x27;ll pay it down on some agreed upon interest rate (which is likely not fixed, but some percentage over prime rate[1]). Notably, you don&amp;#x27;t &lt;i&gt;have to&lt;/i&gt; borrow, it&amp;#x27;s just available with pretty much no questions asked whenever you need it. Kind of like a credit card, but with a lower APR. It&amp;#x27;s very commonly used even for profitable businesses since cash inflows often don&amp;#x27;t match expenditure flows, especially if your company is growing.&lt;p&gt;For example, maybe you grew your company a lot this year and ran out of money in November, but a bunch of your customers will be paying you large sums when annual renewals renew in January. You can&amp;#x27;t just not pay employees in December, so you borrow for a month or two in order to smooth over payroll and other expenses and then pay it back in January.&lt;p&gt;Typically, a revolving line-of-credit is going to help with month-to-month expenses, but won&amp;#x27;t be enough to massively grow your business. For example, if you are a startup, a bank won&amp;#x27;t give you nearly as much money as a VC, but at the same time, you probably don&amp;#x27;t want to give up equity in your company every time you are temporarily behind on payroll. If you are a very large and established company, you&amp;#x27;ll likely have other, cheaper ways of getting money for your day-to-day business. For example, Commercial Paper is basically a short term bond issued by large well-known and creditworthy companies that need to smooth over payroll and other operational expenses. But by the time you are doing things like that, you probably have an entire corporate finance department handling these sorts of things. A revolving line-of-credit is much simpler.&lt;p&gt;[1] prime rate is the interest rate that big banks can borrow at which is typically lower than what &lt;i&gt;you&lt;/i&gt; can borrow at. They&amp;#x27;ll borrow at rate Y and charge you rate Y+Z.</text><parent_chain><item><author>mannymanman</author><text>What is a revolver?</text></item><item><author>gnicholas</author><text>To those saying this is boring, there are some interesting tidbits, like this one:&lt;p&gt;&amp;gt; &lt;i&gt;Should we decide to pursue an acquisition of Ring, we will need to move quickly.&lt;/i&gt; [redacted] &lt;i&gt;and in order to pre-empt the closing of the Series E round, we will likely need to commit to making an investment&lt;/i&gt; [redacted] &lt;i&gt;that converts into the next round of funding should we fail to close the acquisition. This may be required for two reasons: (i) Ring needs to raise capital by the end of the year, otherwise they will have to fund all of their Q4 with their revolver (projected to draw down $32MM by the end of November), and (ii) we will have to put some skin in the game to get them to walk away from the Series E investment.&lt;/i&gt;&lt;p&gt;It&amp;#x27;s useful to know how potential acquirers see transactions, and what they might be willing to do to get you to walk away from another opportunity.</text></item></parent_chain></comment><story><title>Amazon memo: Here’s why we should acquire Ring (2017)</title><url>https://twitter.com/TechEmails/status/1549489359459454976</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>berberous</author><text>In case the other answers are not obvious enough, a term loan is borrowed once; you borrow $X, and the pay it back before the end of the term. A revolver for $X can be tapped and repaid many times, so long as the total borrowed amounts outstanding at any one time do not exceed $X.</text><parent_chain><item><author>mannymanman</author><text>What is a revolver?</text></item><item><author>gnicholas</author><text>To those saying this is boring, there are some interesting tidbits, like this one:&lt;p&gt;&amp;gt; &lt;i&gt;Should we decide to pursue an acquisition of Ring, we will need to move quickly.&lt;/i&gt; [redacted] &lt;i&gt;and in order to pre-empt the closing of the Series E round, we will likely need to commit to making an investment&lt;/i&gt; [redacted] &lt;i&gt;that converts into the next round of funding should we fail to close the acquisition. This may be required for two reasons: (i) Ring needs to raise capital by the end of the year, otherwise they will have to fund all of their Q4 with their revolver (projected to draw down $32MM by the end of November), and (ii) we will have to put some skin in the game to get them to walk away from the Series E investment.&lt;/i&gt;&lt;p&gt;It&amp;#x27;s useful to know how potential acquirers see transactions, and what they might be willing to do to get you to walk away from another opportunity.</text></item></parent_chain></comment><story><title>Amazon memo: Here’s why we should acquire Ring (2017)</title><url>https://twitter.com/TechEmails/status/1549489359459454976</url></story>