What is a credit access line?

A credit access line, also known as a credit line or revolving credit line, is a type of credit facility extended by a financial institution to a borrower. The borrower is given access to a predetermined amount of credit that they can draw upon as needed, up to the approved credit limit. The borrower pays interest only on the outstanding balance and is not obligated to use the entire credit limit.

Credit access lines are typically used as a source of short-term financing for businesses or individuals. They can be used for a variety of purposes, such as funding inventory purchases, covering unexpected expenses, or managing cash flow. The credit line may be secured by collateral, such as real estate or equipment, or may be unsecured.

Credit access lines can be either revolving or non-revolving. Revolving credit lines allow the borrower to draw on the available credit again once the outstanding balance is paid off, while non-revolving credit lines do not allow for additional draws after the initial disbursement.

The interest rate charged on a credit access line is typically higher than other forms of financing, such as term loans, due to the flexible terms and the ability to draw and repay funds as needed.