--%>

Why banks make short-term or self-liquidating loans

Banks desire to make short-term, self-liquidating loans to businesses. Why?

Banks desire to be able to illustrate where the funds are likely to come from such that the borrower is capable to employ to make the required loan payments. Short term, self-liquidating loans do this as the borrowed funds are utilized to purchase assets that produce the needed funds.

 

   Related Questions in Finance Basics

  • Q : Does high operating leverage mean high

    Does high operating leverage for all time mean high business risk? Describe. High operating leverage does not for all time mean high business risk. If the company's sales are fairly stable then the variation into operating income would be smal

  • Q : What is Sinking Fund Sinking Fund : It

    Sinking Fund: It is a fund or account in which money is deposited at customary intervals to offer for the retirement of bonded debt.

  • Q : Describe proprietorship-partnership and

    Briefly describe the terms proprietorship, partnership, and corporation.A proprietorship is a business owned by one person. Two or more people who join together to develop a business make up a partnership. It can be done on an inf

  • Q : Graphically combined transactions and

    Normal 0 false false

  • Q : Association of net present value to

    Normal 0 false false

  • Q : What is Revenue Anticipation Notes

    Revenue Anticipation Notes (RANs): The cash management tool usually used to remove cash flow imbalances in the General Fund in a given fiscal year. The RANs are not a budget deficit-financing tool.

  • Q : What is Victim Compensation and

    Victim Compensation and Government Claims Board, California: It is an administrative body in state government exercising quasi-judicial powers (that is, power to make rules and regulations) to set up an orderly procedure by which the Legislature will

  • Q : Effect of merger activity in the

    How has the merger activity in the past decade influenced the concentration of assets in the banking industry? Over the last decade, the number of commercial banks declined through twenty-one percent and the averag

  • Q : Capital investment appraisal methods

    The capital investment appraisal methods like NPV, IRR, ARR, PV and Time value of money have become irrelevant post Celtic Tiger. Due to the depth of the recession companies do not have budgets to invest. Explain? At first use this

  • Q : Define the term Surplus Define the term

    Define the term Surplus: It is an outdated term for a fund’s excess of assets (or resources) over liabilities.