Seasonal Credit

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DEFINITION of 'Seasonal Credit'

Any type of credit arrangement that permits corporate borrowers to consistently pay their overhead and other expenses despite seasonal components of revenue generation. Seasonal credit is usually presented as a line of credit and then becomes classified as revolving credit.

Seasonal credit can also refer to a type of credit offered by the Federal Reserve discount window that can last for up to 90 days.

INVESTOPEDIA EXPLAINS 'Seasonal Credit'

Seasonal credit is offered to firms that experience seasonal swings in their cash flow. This allows them to continue operating smoothly during months when there may be little or no income.

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RELATED FAQS
  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 >>
  6. What is the relationship between national interest rates and the amount of revolving ...

    National interest rates and the amount of revolving credit issued have a negative relationship. Interest rates rise due to ... Read Full Answer >>
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