Committed Credit Line


DEFINITION of 'Committed Credit Line'

A monetary spending loan balance offered by a financial institution that cannot be suspended without notifying the borrower. A committed credit line is a legal agreement between the financial institution and the borrower outlining the conditions of the credit line. Once signed, the agreement requires the financial institution to lend money to the borrower, provided that the borrower does not break the conditions. Lenders may require the borrower to pay a fee based on the amount that can be borrowed.

BREAKING DOWN 'Committed Credit Line'

Committed credit lines differ from uncommitted credit lines in that they legally bind the lender to provide the funds, rather than giving the lender the option of suspending or canceling the credit line based on market conditions.

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  1. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  2. What are typical forms of long-term debt for a public company?

    Public companies fund their operational needs and capital expenditures with equity or debt. Most often, companies choose ... Read Full Answer >>
  3. What is the difference between subordinated debt and senior debt?

    The difference between subordinated debt and senior debt is the priority in which the debt claims are paid by a firm in bankruptcy ... Read Full Answer >>
  4. How would a standby letter of credit be used during an export transaction?

    A standby letter of credit is typically used to provide a bank guarantee of payment for an exporter in the event that an ... Read Full Answer >>
  5. What are some reasons banks deny applications for checking accounts?

    Consumers and businesses use credit to finance major purchases or emergency expenses that exceed regular cash flow. Credit ... Read Full Answer >>
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