Definition: A line of credit is an informal agreement between a bank or institution and another entity, such as a business or individual, in which the former allows the latter to borrow up to certain limit of money simply by requesting the funds be deposited in their bank account.
Many business utilize lines of credit in the third quarter to build inventories for the fourth quarter selling season. Without access to the money from the bank, they would be unable to carry as much merchandise and take advantage of holiday sales.
