Self liquidating loan define

The borrowed money is used to acquire resources that are combined for later sale, and the proceeds from the sale are used to repay the loan.Most short-term unsecured loans are self-liquidating. This kind of loan is recommended for companies with xcellent credit ratings for financing projects that have quick cash flows..boxy-content a.term-action, button.term-action a.term-action:hover, button.term-action:hover .term-action-bg .term-uex .term-cite .term-fc .term-edit .boxy-dflt-hder .definition .definition a .definition h2 .example, .highlight-term a.round-btn, a.round-btn.selected:hover a.round-btn:hover, a.round-btn.selected .social-icon a.round-btn .social-icon a.round-btn:hover a.round-btn .fa-facebook a.round-btn .fa-twitter a.round-btn .fa-google-plus .rotate a a.up:hover, selected, a.down:hover, selected, .vote-status .adjacent-term .adjacent-term:hover .adjacent-term .past-tod .past-tod:hover .tod-term .tod-date .tip-content .tooltip-inner .term-tool-action-block .term-link-embed-content .term-fc-options .term-fc-options li .term-fc-options li a .checkmark .quiz-option .quiz-option-bullet .finger-button.quiz-option:hover .definition-number .wd-75 .wd-20 .left-block-terms .left-block-terms .left-block-terms li .no-padding .no-padding-left .no-padding-right .boxy-spacing @media (min-width: 768px) @media (max-width: 768px) @media print { a:link:after, a:visited:after nav, .term-action, #wfi-ad-slot-leaderboard, .wfi-slot, #related-articles, .pop-quiz, #right-block, .Calling a loan self-liquidating is just a complicated way of saying that it eventually gets paid off. For example, the popular 30-year fixed rate mortgage is a self-liquidating loan.

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When it ends, you'll still owe 0,000 and you'll need a new mortgage.

A retail business might use a self-liquidating loan to purchase extra inventory in anticipation of the holiday shopping season.

The revenue generated from selling that inventory would then be used to repay the loan.

The repayment schedule and maturity of a self-liquidating loan are timed to coincide with when the assets are expected to produce income.

These loans are intended to finance purchases that will quickly and reliably generate cash.

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