Finance glossary
Line of Credit
Definition
A flexible loan you can draw from up to a set limit.
A line of credit lets a borrower draw funds as needed up to a maximum, paying interest only on the amount used. It offers flexibility for fluctuating needs, unlike a lump-sum loan. Examples include home equity lines and business credit lines.
In a sentence
The business opened a line of credit, drawing on it only when cash ran tight and paying interest on what it used.
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