Line of credit

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Line of credit is an arrangement in which a bank agrees to lend up to a specified maximum amount of funds during a designated period.


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Line of credit. An arrangement in which a bank agrees to lend up to a specified maximum amount of funds during a designated period.

According to Managerial Accounting by Braun, Tietz (5th edition),

Line of credit. A lending arrangement from a bank in which a company is allowed to borrow money as needed, up to a specified maximum amount, yet only pay interest on the portion that is actually borrowed until it is repaid.

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