Finance English
Banking

What is Line of Credit?

Line of Credit A revolving credit facility offered by a financial institution that allows a borrower to draw funds up to a specified limit at any time, repaying and reborrowing as needed.

Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework

How is “Line of Credit” Used in Practice?

Businesses often use a line of credit to finance working capital needs, accessing funds when required and only paying interest on amounts drawn.

Certification Exam Relevance

CFAACCAFRM

Who Needs to Know This Term?

  • Financial Analysts
  • Bankers
  • Traders

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Frequently Asked Questions

What is Line of Credit?

A revolving credit facility offered by a financial institution that allows a borrower to draw funds up to a specified limit at any time, repaying and reborrowing as needed.

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