Final answer:
A line of credit is a prearranged agreement between a company and a lender that allows the company to borrow up to an agreed-upon amount.
Step-by-step explanation:
A prearranged agreement between a company and a lender that permits a company to borrow up to an agreed-upon amount is known as a line of credit.
It is a form of financing that allows businesses to access funds as needed, up to a certain limit, without having to go through the loan application process each time.
This arrangement provides flexibility and convenience to companies, as they can use the funds for various purposes, such as managing cash flow, investing in growth opportunities, or covering unexpected expenses.