line-of-credit

Vocabulary Word

Definition

A 'line of credit' is a unique kind of loan from a bank. Unlike a regular loan where you get all the money at once, a line of credit lets you borrow only when you need and repay over time.

Examples in Different Contexts

For small business financing, a 'line of credit' provides a safety net for operational expenses, allowing businesses to borrow as expenses arise. A financial advisor might advise, 'Utilizing a line of credit can help smooth out cash flow fluctuations during slow business periods.'

Practice Scenarios

Business

Scenario:

Our additional hiring would increase operational costs substantially, let's discuss the best financing options we have.

Response:

Considering the market's volatility, I suggest we utilise our line of credit to cover the short-term costs.

Banking

Scenario:

Our bank is offering a new financial product that provides immediate funds in urgent situations without the hassle of new loan approvals.

Response:

Sounds like a line of credit would be a feasible solution for our customers during tough times.