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
Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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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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