1. Describe what a line of credit involves, and explain the legal obligation of a bank to...

Question:

1. Describe what a line of credit involves, and explain the legal obligation of a bank to provide capital with a line of credit.

2. On what three priorities might Bank-RI representative Matt Weiner have based the decision to extend Moon Associates’ line of credit or offer additional financing? What are the “five C’s of credit”?

3. Even as the remodeling market weakened and taking on extra financing became risky, what are some things that Moon Associates’ president and CEO Jim Moon did to sustain the company’s long-term profitability?

4. Could Moon Associates have obtained the needed capital to not only keep the company running but expand its Renewal by Andersen line through a mortgage loan? If so, for how long could such a loan be financed?

Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...