Self-Liquidating Debt

From GM-RKB
Jump to navigation Jump to search

A Self-Liquidating Debt is an economic debt that is repaid with money generated by the financed assets.



References

2015

  • http://www.investopedia.com/terms/s/self-liquidating-loan.asp
    • QUOTE: A type of short- or intermediate-term credit that is repaid with money generated by the assets it is used 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 reliably generate cash.

      A 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 be used to repay the loan. Self-liquidating loans are not always a good credit choice. For example, they do not make sense for fixed assets, such as real estate, or depreciable assets, such as machinery. There are also a number of scams that call themselves "self-liquidating loans".

2014