Lines of Credit and revolving Credit Agreements
Lines of Credit have a number of important features
- Interest rate tied to prime rate
- Operating change restrictions
- Compensating balances of 10% and 20%
Revolving credit agreements are lines of credit that are guaranteed to the borrowers by their banks for a stated period of time regardless of the scarcity of money
- Often made for a period of greater than 1 year
- A Commitment Fee is normally charged by the lender
- 1994, HarperCollins Publishers