A credit line is any facility extended by a bank or a financial institution  to a business. A line of credit may take several forms such as cash credit, overdraft, demand loan, export packing credit, term loan, discounting or purchase of commercial bills etc.

It is an account that can readily tapped whenever the needs arises or not to touch to save for emergencies. Interest will be paid on the money you actually take out.

Lines of credit will be extended by a bank or a financial institution to credit worthy customer to overcome liquidity problems.