line of credit


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Line of credit

An informal loan arrangement between a bank and a customer allowing the customer to borrow up to a prespecified amount.

Line of Credit

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.

line of credit

A credit arrangement in which a financial institution agrees to lend money to a customer up to a specified limit. A line of credit, generally arranged before the funds are actually required, provides flexibility for the customer in that it ensures the ability to meet short-term cash needs as they arise. Also called bank line, credit line, revolver, revolving credit agreement.

Line of credit.

A line of credit, sometimes called a bank line, is the most you can borrow under a revolving credit arrangement with a credit card issuer, bank, or mortgage lender.

When you borrow against a line of credit, you pay interest on the amount of money you actually borrow, not on the available balance, or full amount you are able to borrow.

For example, if you have a $10,000 line of credit on a credit card, you may borrow as much or as little as you want up to that amount, and you pay interest only on the amount you have borrowed.

If you carry a balance of $3,000, you only pay interest on that amount, but there is still $7,000 available for you to borrow. Once you repay the amount you borrow, you can use it again.

A line of credit may be secured with collateral, or unsecured. A line of credit on a credit card is usually unsecured, for example. But if you have a home equity line of credit, your home serves as collateral against the amount you borrow.

line of credit

A revolving loan issued by a financial institution;it may be secured by a mortgage or other collateral, or unsecured.The borrower may draw down the line, up to the maximum limits, at any time and pay interest each month. If the principal is repaid during the time period of the line, then the maximum amount or any lesser amount may be drawn down again.Lines of credit are typically for one year, and then extended from year to year afterward. If a borrower draws down the maximum amount and then does not repay any of the principal,the lender will eventually refuse to renew the note and may require payment in full or conversion to an amortizing loan with regular monthly payments that will eventually pay it in full.Lines of credit are best used by persons with reliable income arriving at sporadic times or by persons awaiting the sale of an asset but needing cash in the meantime.

References in periodicals archive ?
Bullet repayment simply means repaying the principal of your loan as a lump sum at the end of the tenor of the line of credit. For example, if you take a line of credit amounting to Rs.10 lakhs, you will have to repay this amount at the end of your tenor, which is 60 months or 5 years.
*A $2 million second mortgage and $500,000 line of credit for Jeffrey Gardens Apartment Corp., a 277-unit co-op at 46-43 215th Street in Bayside, NY;
CPAs with a full understanding of the mechanics of a securities-based line of credit can explore its potential uses.
Unsecured business line of credit: Most business owners looking to get a line of credit prefer this option because the lender does not require any assets as collateral.
* A $2.1 million first mortgage and $250,000 line of credit for a 27-unit co-op at 40 West 84th Street in Manhattan;
Turner, Chairman of the Board and Chief Executive Officer of the Company said, The line of credit provides continuity for our acquisition strategy and we believe it to be the most advantageous source of funding for the Company and its shareholders at this time .
Thus, a line of credit represents a ready source of financing for any business need or contingency that arises.
While the Resers were married, Rebecca advanced significant amounts of her personal funds for DRPC's operating expenses and knew her husband had obtained a line of credit from the bank.
M2 PRESSWIRE-August 21, 2019-: Business Line of Credit helping small businesses to meet their financial obligations
Edward Howe III, managing director of the NCB New York office, reported $25 million in originations during March, including the largest, a $9.5 million first mortgage and $1 million line of credit for Terrace Gardens Plaza, Inc., a 375-unit co-op at 920 East 17th Street in Brooklyn, NY.
M2 EQUITYBITES-December 23, 2015-Rice Family Trust announces sale of 5m shares to pay down line of credit
The Carroll County Board of Supervisors announced that they affirmed to engage into a moral obligation pact with Virginia Community Capital in order to render a line of credit of up to $1,000,000 to aid manage the Southwest Virginia Farmers Market.