Krediidiliiniga

Krediidiliiniga, also known as a credit line, is a financial arrangement between a borrower and a lender that allows the borrower to access a predetermined amount of credit up to a certain limit. This type of agreement is commonly used by businesses to manage their cash flow and meet short-term financial needs without the need for frequent borrowing. The credit line is typically established for a specific period, during which the borrower can draw funds as needed, repaying the amount used within a specified timeframe.

There are two main types of credit lines: revolving and term. A revolving credit line allows the borrower to repeatedly draw and repay funds within the agreed limit, similar to a credit card. In contrast, a term credit line is a one-time loan with a fixed repayment schedule, often used for larger projects or investments.

Credit lines offer several advantages, including flexibility in managing cash flow, lower interest rates compared to short-term loans, and the ability to avoid the administrative burden of frequent borrowing. However, they also come with risks, such as the potential for overdrawing the limit, which can lead to additional fees or penalties.

To qualify for a credit line, borrowers typically need to demonstrate a strong credit history, stable income, and a viable business plan. Lenders assess these factors to determine the appropriate credit limit and interest rate. Proper management of a credit line is crucial to maintain a healthy financial position and avoid potential pitfalls.