Operating-change restrictions gives the bank a right to revoke the line of credit if any major changes occur in a firm's financial condition or operations.

Question

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Operating-change restrictions are put in place to protect the bank's security interest by limiting the borrower's ability to radically change their operations or financial condition without the bank's knowledge and consent. If the borrower violates these restrictions, the bank has the right to revoke the line of credit.

Operating-Change Restrictions Gives the Bank a Right to Revoke the Line