Upon obtaining a $100,000 business loan from his local bank, Arthur was informed that he must keep at least $10,000 on deposit with the bank. This is referred to as a/an ______.

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This is known as a compensating balance, which is a minimum balance that must be maintained in a bank account as a condition for obtaining a loan. It is a way for the bank to ensure it retains some funds related to the loan.

Upon Obtaining a $100,000 Business Loan from His Local Bank