A credit line refers to a borrowing limit set by a lender for a borrower. It is an arrangement whereby the lender agrees to make funds available to the borrower up to a specified amount, usually for a certain period of time. The borrower can access these funds as needed and pay interest only on the amount they use. A credit line can be used for various purposes such as financing inventory or covering operational expenses. It is often set up as a revolving credit facility, meaning that once the borrowed funds are repaid, the borrower can reuse the credit line again.