Question

Maria wants to start a restaurant of her own. as she does not have any savings, she approaches her bank for money and enters an agreement with the bank. according to the agreement, the bank agrees to lend her $5000 upon request provided it has sufficient funds to loan the amount. in this scenario, the type of funding obtained by maria can be regarded as a _____.

Answer 1

Line of credit

Step-by-step explanation:

Line of credit ( LOC )-

It is the monetary value , which the bank or any credit union agrees to lend , with a predefined limit , from which the person can use the amount and then the interest is paid for the amount the person has borrowed , is known as line of credit .

In the case of LOC , a maximum limit , the interest rate and the time to repay back the amount with some minimum payments is defined beforehand .