What is the difference between a term loan facility and a revolving credit facility secured under the PPSA?

A term loan is a fixed amount of money advanced to a corporation upfront, generally repaid according to a set schedule over a defined period, and used for something specific, such as buying equipment or funding an expansion. A revolving credit facility instead lets the corporation draw funds, repay them, and draw again up to an approved credit limit as its needs change, functioning more like an ongoing business line of credit for day-to-day working capital.

Both types of facility are commonly secured under the same general security agreement, registered under Ontario's Personal Property Security Act, but the practical relationship between the facility and the collateral tends to differ. A revolving facility is often tied closely to the value of a fluctuating asset base, like inventory and accounts receivable, with the amount available to draw sometimes calculated against the current value of those assets. A term loan is more often linked to a specific, more stable asset, such as equipment being financed, or simply to the corporation's general creditworthiness. Corporations frequently have both types of facility in place at once, from the same or different lenders, with the PPSA's priority rules sorting out how the security interests interact.