A pre-determined amount of short-term financing available for a business to borrow against on an "as needed" basis and repaid during the specified life of the line is called:

• A. Mission Statement
• B. Market
• C. Merger
• D. Line of Credit

Answer: (D)

Line of credit refers to a pre-approved amount of funds a business can borrow on an as-needed basis and repay over the life of the facility. It provides flexible, revolving access up to a set limit, with interest charged only on the actual amount borrowed. This makes it ideal for smoothing cash flow, covering short-term gaps, or financing items like inventory and payroll. It differs from a term loan, which provides a lump sum upfront with fixed, scheduled repayments. A mission statement describes purpose and values; a market is the group of potential customers; a merger is the combination of two companies.