A line of credit is a short-term, pre-approved loan for a specific amount. A line of credit can readily be tapped at the borrower’s discretion, as long as you do not exceed the maximum set in the agreement. Lines of credit can be secured by collateral or unsecured. A line of credit loan is designed to address liquidity issues that are inherent in most businesses. This type of loan allows you to borrow repeated, so that you repay and borrow as often as needed. Interest is paid only on money actually withdrawn.