A line of credit (LoC) is a flexible financing arrangement that allows borrowers to access funds up to a predetermined limit, repay, and reuse the funds as needed.

Unlike traditional loans, interest is only charged on the amount drawn, not the entire credit limit. Lines of credit are commonly used for working capital, emergency expenses, or ongoing projects, offering businesses and individuals liquidity and financial flexibility. They can be secured (backed by collateral) or unsecured (based on creditworthiness), with terms and conditions tailored to the borrower's needs.

Proper management of a line of credit is essential to maintain financial health and optimize borrowing costs.