A line of credit is useful for the business to meet its working capital requirements.
Line of Credit Banks provide a line of credit to the borrower.
The line of credit has a revolving credit card structure which means that the business firm is expected to pay off only the minimum interest that accrues on its loans.
In case of default, the bank has prior claim on the assets of the company.
A medium to poor credit quality ensures that the borrower turns to bank loans.
A company needs short-term loans in order to meet its working capital requirements.