Notes and Lines of Credit
Single-Payment Notes are one-shot loans, 30 days to 9 months in maturity, with interest tied to the prime rate
Lines of Credit are agreements between a bank and a business specifying the amount of unsecured short-term borrowing the bank will make available to the firm over a given period of time
- A line of credit is not a guaranteed loan, only preapproved credit
- The bank will usually require cash budgets and pro forma financial statements before approving a line of credit
- The line of credit usually represents the maximum amount the business can owe the bank at any point in time
- 1994, HarperCollins Publishers