A pre-approved borrowing limit provided by a bank or financial institution that allows a company or individual to access funds as needed.
A line of credit is a flexible borrowing arrangement provided by a financial institution that allows small business owners to access a predetermined amount of funds on an as-needed basis. It acts as a revolving credit facility, where the business can withdraw funds up to the approved limit and only pay interest on the amount borrowed. A line of credit provides quick access to working capital for managing cash flow, covering short-term expenses, and seizing opportunities for business growth. It offers the convenience of borrowing and repaying funds multiple times, making it a valuable financial tool for small businesses.