A self-liquidating loan is a form of short- or intermediate-term credit that is repaid with money generated by the assets it is to purchase. The repayment schedule and maturity of a self-liquidating loan are designed to coincide with the timing of the assets' income generation. These loans are intended to finance purchases that will quickly and Non self liquidating debt service generate cash.
Although technically, few loans are actually legally named "self-liquidating," this is more appropriately called bankers slang or a feature of a loan or credit facility.
Non self liquidating debt service A business might use a self-liquidating loan or assets to purchase extra inventory in anticipation of the holiday Non self liquidating debt service season.
The revenue generated from selling that inventory would be used to repay the loan. Self-liquidating loans are not always a good credit choice. For Non self liquidating debt service, they do not make sense for fixed assetssuch as real estate, or depreciable assets, such as machinery. In many ways, a self-liquidating loan is a synthetic form of a revenue bond with a sinking-fund feature. Whereas revenue bonds are secured by specific revenue sources, as such tolls for highways and a sinking fund dedicates money to be set aside for debt settlement.
Non self liquidating debt service also a number of scams that call themselves "self-liquidating loans" or "self-liquidating assets. An unsuspecting Non self liquidating debt service often financially challenged investor base can fall victim to good salesmanship and misrepresentation. What is a 'Self-Liquidating Loan' A self-liquidating loan is a form of short- Non self liquidating debt service intermediate-term credit that is repaid with money generated by the assets it is used to purchase.
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