Line Of Credit - LOC

An arrangement between a financial institution (usually a bank) and a customer establishing a maximum loan balance that the bank will permit the borrower to maintain.

Investopedia Says:
The advantage of a line of credit over a regular loan is that you usually don't pay interest on the part of the line of credit that you don't use.

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Commitment by a bank to lend funds to a borrower up to a specified amount over a specified future period. Lines of credit are reviewed annually, and do not require fees or compensating balances unless the line is guaranteed by the lender. Bank lines are considered good until further notice and may be withdrawn at the bank's option. When the borrower is officially notified of the credit available, the line is referred to as an advised line. When the maximum credit is kept internal by the lender, and not disclosed, it is a guidance line. In a commercial line of credit, the borrower is usually required to keep 10% to 20% of the available line in a Compensating Balance. See also Check Credit; Home Equity Credit; Overdraft; Revolving Credit.

An agreement whereby a financial institution promises to lend up to a certain amount without the need to file another application. See Home Equity Line of Credit, Home Equity Loan.
Example: Happy Homes Brokers, Inc., has a line of credit under which they can borrow up to $50,000 at 3% above the Prime Rate through The Goodmoney National Bank.