Line of credit is a source of credit extended to governments, businesses or individuals by banks or other financial institutions. A line of credit takes several forms, such as overdraft protection, demand loan, special purpose, export credit packaging, term loans, discounts, commercial bill purchases, traditional revolving credit card accounts, etc. This is an effective source of funds ready to be tapped into the borrower's discretion. Interest is only paid on money that is actually withdrawn. (However, the borrower may be required to pay unused fees, often the annual percentage fee on the money not withdrawn.) The line of credit can be secured by warranty, or it may be unsafe.
Credit lines are often extended by banks, financial institutions and other licensed consumer lenders to credit-worthy customers (although some custom-purpose credit lines may not have credit eligibility requirements) to address liquidity issues; such credit lines are often called personal credit lines . This term is also used to define a customer credit line, which is the maximum amount of credit allowed by the customer.
Video Line of credit
Kredit tunai
Credit cash is a short term cash loan to the company. A bank provides this type of funding, but only after the necessary security is provided to secure the loan. Once payment security has been provided, the business that receives the loan can continue to withdraw from the bank up to a specified amount.
India
In India, banks offer a cash credit account to companies to finance their "working capital" requirements (requirements for buying raw materials or "current assets" , compared to machines or buildings , which will be called " fixed assets "). The cash credit account is similar to a checking account because it is a running account (i.e., paid on demand) with a checkbook facility. But unlike a normal checking account, which should only be charged occasionally, a cash credit account should be multiplied too much. Excessive withdrawal rate is limited to the cash limit approved by the bank. This sanction is based on the assessment of the maximum working capital requirement of the organization minus margin. The organization finances the margin amount from its own funds.
Generally, a cash credit account is secured at the cost of the current assets (inventory) of the organization. The type of charge made can be either a promise or a hypothesis.
Maps Line of credit
Credit business line
The line of credit business is very similar to the personal credit line. Financial institutions provide access to certain financing. However, no interest occurs until the funds are tapped. The credit line business can be unsecured or secured (usually, with inventory, accounts receivable or other collateral) Credit lines are often referred to as rolling and can be tapped repeatedly. For example, if there is access to the $ 60,000 credit line and $ 30,000 removed, access to the remaining $ 30,000, if necessary, persists. If all $ 30,000 is refunded, there is access to all $ 60,000 without having to reapply, one of the biggest benefits of the line of credit.
References
Source of the article : Wikipedia
0 Comments