Maria wants to start a restaurant of her own.As she does not have any savings,she approaches her bank for money and enters an agreement with the bank.According to the agreement,the bank agrees to lend her $5000 upon request provided it has sufficient funds to loan the amount.In this scenario,the type of funding obtained by Maria can be regarded as a _____.

Question

Quizplus · Accepted Answer

A line of credit is a flexible loan from a bank or financial institution. Similar to a credit card that offers you a limited amount of funds—funds that you can use when, if, and how you wish—a line of credit is a defined amount of money that you can access as needed and then repay immediately or over a prespecified period of time. In Maria's case, the bank agrees to lend her up to $5000 upon request, which is exactly how a line of credit works.

Maria Wants to Start a Restaurant of Her Own