An informal line of credit and a revolving credit agreement are similar except that a line of credit creates a legal obligation for the bank.

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An informal line of credit and a revolving credit agreement are similar in that they both allow the borrower to borrow funds up to a certain limit and repay the borrowed amount along with interest. However, a revolving credit agreement creates a legal obligation for the borrower to repay the borrowed amount, whereas an informal line of credit does not have a formal agreement outlining the terms of borrowing and repayment, and therefore does not create a legal obligation.

An Informal Line of Credit and a Revolving Credit Agreement