A line of credit is a financial arrangement between a firm and a bank in which the bank pre-approves credit up to a specified limit and guarantees that this credit will be available even if the borrower's credit rating deteriorates.

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A line of credit is indeed a financial arrangement where a bank pre-approves a specified limit of credit to a firm or individual, but the availability of this credit is not guaranteed if the borrower's credit rating deteriorates. The bank may review and adjust the terms or revoke the line of credit if there's a significant negative change in the borrower's financial situation.

A Line of Credit Is a Financial Arrangement Between a Firm