An agreement between a
bank and a company or an individual to provide a certain amount in
loans on demand from the
borrower. The borrower is under no obligation to actually take out a loan at any particular time, but may take part of the
funds at any time over a period of several years. This agreement is fairly common in situations in which a business must make payroll but does not always have the
operating income to do so, especially when its operating income is seasonal or otherwise varies from month to month. It is also called open-end credit or a revolving line of credit. See also:
Credit Card.