Category:Line of Credit

A line of credit is similar to a loan in key respects:

• It advances requested funds to a borrower up to a preset maximum dollar amount
• The borrower must repay these funds, plus interest, by a specified date

Because of these fundamental similarities, the Line of Credit functionality in DDI-Connect should be familiar to those who have used the Loans system. Both consist of payment receipting, payment reversal, fund advances and advance reversal.

However, a line of credit is not a loan. It meets different borrower needs and presents a different set of administrative challenges for your organization. With a loan the loan amount is issued to the borrower once and the borrower repays the amount once. However a line of credit may consist of multiple advances and repayments within a defined period as long as the overall credit balance does not exceed a specified limit.