BizTerm Definition
Line of Credit
Full Definition

Arrangement whereby a lender agrees to lend up to a specific amount of money during a specific period, usually one year. A commitment fee is sometimes imposed on the borrower. For business, a line of credit is the most economical way to borrow money since only interest is charged on the amount actually borrowed. A second type of line of credit is called revolving. Revolving line of credit usually requires collateral, has a loan duration over a year, and is available only to established companies.

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