Self-liquidating loan

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Self-liquidating loan

Loan to finance current assets. The sale of the current assets provides the cash to repay the loan.

Self-Liquidating Loan

A loan used to finance the purchase of assets intended to be sold within a short period of time. For example, a company may use a self-liquidating loan to pay for its inventory, which it intends to quickly sell. It is called a self-liquidating loan because the proceeds from the sale of the assets provide the capital with which the debtor may repay the loan.