Line of Credit
- A credit agreement, often arranged before funds are needed, in which a financial institution agrees to lend money to a client up to a maximum amount for a specific period of time. Having a line of credit provides flexibility for customers and enables them to meet short-term cash requirements. Also referred to as a bank line or credit line.
Related Terms and Acronyms
- Business Line of Credit (BLOC) — Acronym,
- Credit Card (CC) — Acronym, Very Important,
➥ A payment card that gives customers access to a revolving line of credit.
- A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
- Credit Line — Definition,
- The maximum money amount available in an open-end credit arrangement such as a credit card or overdraft protection.
- Draw Period — Definition,
- On a line of credit, the draw period is the fixed time when a borrower can make withdrawals from the account. After the draw period expires, the borrower can renew the credit line or may be required to pay the outstanding balance in full, or over time.
- Equity Line of Credit (ELOC) — Acronym,
- Home Equity Line of Credit (HELOC) — Acronym, Very Important,
➥ Also known as a Home Line of Credit.
- An open-ended loan, paid as revolving debt, that is backed by the equity in the property.
- Interest-Crediting Methods — Definition,
- A number of methods used to establish how interest is accrued, owed and dispersed to the parties due.
- Operating Loan — Definition,
- A loan intended for short-term financing, supplying cash flow support or to cover day-to-day operating expenses.
- Personal Loan — Definition,
- A loan made for personal, family, or household use as opposed to a business-type loan or a long-term mortgage loan to finance real estate.
- Repayment Period — Definition,
- In a home equity line of credit, that portion of the life of the loan that follows the draw period. During the repayment period, the borrower cannot take out any more money, but must pay down the loan.
- Retail Banking — Definition,
- Banking services offered to individual customers such as savings accounts, personal loans, cheque cashing, and RRSPs.
- Revolving Credit — Definition,
- A line of credit that does not have a specified repayment schedule but may require a minimum payment to cover interest and contribute to paying off principal. Typical of credit card loans, chequing account cash reserve or overdraft accounts that have pre-approved lines of credit.
- Revolving Line of Credit (RLOC) — Acronym,
- An agreement to lend a specific amount to a borrower, and to allow that amount to be borrowed again once it has been repaid. Most credit cards offer revolving credit.
- Secured Line of Credit (SLC) — Acronym,
- Small- and Medium-sized Enterprises (SMEs) — Abbreviation,
➥ A term widely used by the World Bank and the World Trade Organization (WTO).
- Limits banks place on businesses to determine there size.
- Unsecured Loan — Definition,
- An advance of money that is not secured by collateral.