Letter offering line of credit to a customer

This is a legal document, covered by business and credit laws.

A line of credit is a term of trade.

By offering a line of credit, you're bound by the terms of your credit offer.

Many lines of credit come with an accompanying formal agreement setting out terms on which credit is provided. Some, however, are basically 'shop credit', a less formal arrangement. This sort of credit is usually offered to customers considered good risks.

Your letter should specify terms to document your conditions, if you're not entering into a formal agreement.

Note: Charging interest on overdue credit accounts can be problematic, if you didn't give prior notification of charges for late payments. You may not be able to enforce payments, and the payee may be able to claim improper charging.

The example below is based on simple credit. No interest is being charged, and it's a straightforward repayment system.

Example:

(Business letterhead)

Addressee

Your reference
Our reference
Contacts

Dear…

Request for line of credit

I refer to your letter of (date). I'm pleased to inform you that your request for a line of credit has been approved, subject to the following conditions:

The credit limit is set at $10,000.00
The period of this line of credit is one year.
Payments of amounts owing must be settled within 90 days from the date of charges being incurred.
We reserve the right to cancel the line of credit at any time, and in such event all outstanding payments must be settled within 30 days of cancellation.

Please note these are standard terms for our lines of credit.

If acceptable, please reply in writing stating your acceptance of these terms.

The line of credit will be made available within 7 working days of your reply.

If you require any further information please contact the writer directly on the above phone number or email.

Yours sincerely

Sign
Title
Date

Disclaimer

Please note:

This text is intended for advisory and guideline purposes only.

Any business letter can become a legal document, so check your content properly before issuing.

Any executable or statutorily defined document should be checked for compliance with legal requirements, and you should seek legal advice regarding its contents.