Definition of self liquidating debt military connections dating
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.
For example, a retired individual may choose to liquidate a stock investment to raise cash for paying household bills.
Asset liquidation is also an important part of the bankruptcy process.
These loans are intended to finance purchases that will quickly and reliably 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.
In financial terminology, assets are items that have value.
Liquidation of assets refers to selling off property in order to raise cash.
Because cash is already a liquid asset, there is no need to liquidate it to pay creditors.
However, all non-cash assets can be converted into cash for the purpose of paying debt or making purchases.
A business might use a self-liquidating loan (or assets) 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.
Then the borrower takes the revenue generated from those business activities and uses it to repay the money that was borrowed to finance the activities.