A line of credit provided by a commercial bank allows a company the right (but not the obligation) to borrow a specified maximum amount of funds over a specified period of time.

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A line of credit is typically a flexible borrowing arrangement between a borrower and a lender, where the borrower has access to a specified maximum amount of funds but is not required to borrow them all at once. This type of arrangement is often offered by commercial banks to businesses, allowing them to draw on the line of credit as needed and only pay interest on the amount borrowed.

A Line of Credit Provided by a Commercial Bank Allows