Explain the difference between a promissory note, a line of credit, and a revolving credit agreement.

A promissory note is a contract associated with a particular loan. A line of credit and a revolving credit agreement are arrangements between a company and a bank stipulating the maximum level of credit the bank will advance in a designated period. A line of credit is an informal agreement meaning the unused portion can be revoked at any time. The revolver is a legal commitment by the bank to have funds available if the borrower wants them. It requires that the borrower pay a commitment fee on unborrowed amounts up to the agreement limit.