What is the real difference between the two?
When the principal comes back. A bullet term loan returns all of it on one date, several years out, on the assumption that the borrower will refinance rather than repay. A revolving facility returns principal continuously as the underlying assets convert, and re-lends against whatever the borrower has generated since.
That difference sounds administrative and is not. A bullet structure means the lender holds full exposure for the entire term and then depends, on a single day, on the availability of somebody else's capital. A revolving structure means the lender's exposure is being tested and repaid every collection cycle, and can be reduced without anyone declaring a default.
The capacity mechanism differs accordingly. A term loan is sized off a multiple of EBITDA at closing, which is a measurement of the past. A revolving facility is sized off a borrowing base that is recalculated as often as monthly against current receivables, inventory and equipment, with typical advance rates of 80 to 85 percent on eligible receivables and around 50 percent on a blended inventory basis (ABF Journal, 1 June 2026).
So the two facilities do not merely differ in repayment schedule. They differ in what they are secured on, how often that security is re-measured, and how much has to be true on the final day for the lender to be repaid.
| Revolving or asset-based facility | Bullet term loan | |
|---|---|---|
| When principal returns | Continuously, as receivables and inventory convert | In full on the maturity date, normally by refinancing |
| What governs capacity | A borrowing base recalculated as often as monthly against eligible collateral | A multiple of EBITDA measured at closing |
| Where the risk concentrates | In collateral quality: receivable ageing, customer concentration, inventory turns | On one date, in the availability of somebody else's capital |
| Observed pricing | One recent large asset-based revolver at SOFR plus 125; lower middle market asset-based revolvers quoted at SOFR plus 200 to 350 | The same borrower's term loan B at SOFR plus 200; lower middle market unitranche at SOFR plus 550 to 750 below ten million dollars of EBITDA |
Why does continuous repayment lower risk?
Because the lender's exposure amortises whether or not anyone intervenes, and because the collateral is re-tested constantly rather than at underwriting. A facility whose availability falls as receivables fall is one that shrinks alongside the business, which is the opposite of what a bullet does when trading deteriorates.
There is a second effect that matters more for a lender than for a borrower. A book of many small, continuously repaying exposures produces a loss distribution with far less concentration than a book of large single-date exposures, because the timing of each repayment is spread across the cycle rather than clustered. That granularity is a structural property, not a credit judgement.
The current asset-based data shows the mechanism working, and shows its limits. Committed asset-based lines stood at 310.4 billion dollars in the first quarter of 2026, up 2.2 percent year on year, with utilisation at 39.1 percent, up 1.8 points on the quarter, while non-accruals rose to 1.38 percent, up 42 basis points year on year and roughly triple the 0.33 to 0.56 percent band that held from the second quarter of 2023 through the fourth quarter of 2024 (SFNet Q1 2026 Asset-Based Lending Survey, released 1 July 2026).
No published dataset compares realised loss rates between amortising and bullet structures at middle-market size, so the comparison should be argued from mechanism rather than from a loss table. Anyone offering a loss-rate spread between the two is estimating.
“A term loan asks one question on one day, several years from now, and the answer depends on a credit market nobody can forecast. A revolver asks a smaller question every month and answers it out of the business itself. Borrowers choose between them on price, which is the least important of the differences.”
What does the maturity wall show about bullet risk?
That single-date repayment concentrates into visible cliffs, and that the market spends years moving them. Thirty-nine billion dollars of index loans mature in 2027 against two hundred and thirty billion in 2028 (LevFin Insights, CR TrendLines July 2026, as at 30 June 2026), and 34 percent of US leveraged loans mature across 2028 and 2029, which is why the rating agency framing is that 2027 is not the wall and 2028 is (Fitch Ratings, 27 January 2026).
Borrowers have been pushing the date rather than repaying it. Maturities through the end of 2027 fell to 32 billion dollars from 62 billion at the end of 2025, with 129 billion pushed into 2029 and beyond, on a record 106 billion dollars of amend-and-extend activity year to date through June, up 26 percent year on year (PitchBook LCD, 17 July 2026). Private equity backed borrowers drove 74 percent of maturity-extension amendments.
Extension is a real tool and it is not free. The easy part of the refinancing pipeline is finished: opportunistic refinancing has largely exhausted itself because borrowers who could refinance into tighter spreads had already done so, and refinancing issuance fell 40.6 percent year on year in the first quarter of 2026 (PitchBook via Capstone Partners, Q1 2026).
Underneath the aggregate sits a cohort problem. Borrowers from the 2021 and 2022 vintages carry leverage roughly 0.9 times higher than at underwriting and adjusted cash interest coverage about 0.4 times lower, with refinancing risk staying elevated through 2027 (Valuation Research Corporation, Q2 2026). A bullet maturity is a promise to be refinanceable on a date. That cohort made the promise under different conditions.
What does the borrower pay for each structure?
Less for the revolver, in coupon terms, and more in discipline. One recent large asset-based revolver priced at SOFR plus 125 while the same borrower's term loan B priced at SOFR plus 200 (ABF Journal, 27 July 2026), a 75 basis point gap on the same credit on the same day. In the lower middle market, asset-based revolvers are quoted around SOFR plus 200 to 350 and bank asset-based revolvers more broadly at SOFR plus 350 to 650, both from practitioner sources rather than an index (PeerSense Capital Advisory, 1 July 2026; CT Acquisitions, Q2 2026).
Set that against the cash-flow ladder. A senior commercial bank cash flow facility for a borrower above twenty-five million dollars of EBITDA prices at SOFR plus 275 to 350, while non-bank unitranche for a borrower below ten million dollars of EBITDA prices at SOFR plus 550 to 750, which is an all-in of roughly 9.15 to 11.15 percent at a one-month term SOFR of 3.65 percent (SPP Capital Partners, Market At A Glance, July 2026).
The discipline cost is real and it is where borrowers get caught. A borrowing base is recalculated against eligible collateral, so availability falls when receivables age, when a customer becomes concentrated, or when inventory stops turning. The specific 2026 pressure is tariffs: inventory cost has risen roughly 15 percent on average, slowing turns and pressuring liquidation value, and the widening gap between cost basis and net orderly liquidation value is the operative issue (ABF Journal, Q2 2026).
There is also a base-rate point that applies to both structures and is often missed. Three-month SOFR forwards price 4.04 percent at the end of 2027 against 3.76 percent in early August 2026, and the guidance from lenders through the second half of 2026 has been to term out floating-rate debt rather than wait for cuts (Blue Gamma, 4 August 2026; ABF Journal, 27 July 2026).
Which structure suits which business?
A revolving or asset-based facility suits a business whose working capital genuinely converts: receivables from creditworthy customers on normal terms, inventory that turns, equipment with a resale market. The facility follows the cycle, and in a seasonal business it funds the peak without financing the trough at the same size all year.
A bullet term loan suits a business whose value is in contracted cash flow rather than in convertible assets: recurring revenue, service businesses with few receivables and no inventory, or an acquisition where the lender is underwriting the earnings rather than the balance sheet. Forcing that borrower into a borrowing base produces a facility too small to be useful.
Most middle-market capital structures use both, and the useful question is which risk sits where. Put the seasonal and cyclical funding need on the facility that re-tests itself, and put the acquisition financing on the instrument that matches the asset's life, then check that the two maturities are not the same date.
The last point is the one to act on. If the structure carries a bullet, the refinancing work begins twelve to eighteen months ahead of it, not at the maturity. Given a documented 2028 concentration, an exhausted opportunistic pipeline and a forward curve that prices base rates higher rather than lower, a borrower with a 2028 maturity is already inside the window where the conversation should be happening.
As of August 2026
Sources: ABF Journal, 1 June 2026, for advance rates on eligible receivables, blended inventory and equipment; ABF Journal, 27 July 2026, for the paired asset-based revolver at SOFR plus 125 against the same borrower's term loan B at SOFR plus 200, and for guidance to term out floating-rate debt in the second half of 2026; ABF Journal, Q2 2026, for tariff-driven inventory cost increases of roughly 15 percent and the widening gap between cost basis and net orderly liquidation value; PeerSense Capital Advisory, 1 July 2026, and CT Acquisitions, Q2 2026, for lower middle market and bank asset-based revolver spreads, both practitioner sources rather than index data; SPP Capital Partners, Market At A Glance, July 2026, for senior bank cash flow and non-bank unitranche pricing by EBITDA band and the all-in calculation at one-month term SOFR of 3.65 percent; SFNet Q1 2026 Asset-Based Lending Survey, released 1 July 2026, for committed lines of 310.4 billion dollars, utilisation of 39.1 percent and non-accruals of 1.38 percent against the 0.33 to 0.56 percent band from the second quarter of 2023 to the fourth quarter of 2024; LevFin Insights, CR TrendLines July 2026, as at 30 June 2026, for 39 billion dollars of index loans maturing in 2027 against 230 billion in 2028; Fitch Ratings, 27 January 2026, for 34 percent of US leveraged loans maturing across 2028 and 2029; PitchBook LCD, 17 July 2026, for maturities through end-2027 falling to 32 billion dollars from 62 billion, for 129 billion pushed into 2029 and beyond, for record amend-and-extend activity of 106 billion dollars year to date and for the 74 percent private equity share of maturity-extension amendments; PitchBook via Capstone Partners, Q1 2026, for refinancing issuance falling 40.6 percent year on year and the exhaustion of the opportunistic pipeline; Valuation Research Corporation, Q2 2026, for 2021 and 2022 vintage borrowers carrying leverage about 0.9 times higher and coverage about 0.4 times lower than at underwriting; Blue Gamma, 4 August 2026, for three-month SOFR forward pricing. Structuring guidance is drawn from our own mandate practice. Companion articles on this site cover asset-based lending mechanics and borrowing base concentration.