--%>

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 : Use of obtainable resources Normal 0

    Normal 0 false false

  • 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 : Describe annuity Normal 0 false false

    Normal 0 false false

  • Q : Define Control Sections Control

    Control Sections: The sections of the Budget Act (that is, 1.00 to the end) giving specific controls on the appropriations itemized in the Section 2.00 of Budget Act.

  • Q : Describe benefits of collecting early

    Describe benefits of "collecting early" and how do companies effort to do this? Money contains time value. The sooner cash is gathered, the better. Companies employ regional collection centres and lock boxes to facilitate this.

  • Q : Firm risk of any capital budgeting

    Describe how to measure the firm risk of any capital budgeting project. The firm risk of a capital budgeting project measures the effect of adding a new project to the present projects of the firm.

  • Q : What is Abolishment of Fund Abolishment

    Abolishment of Fund: It is a closure of fund pursuant to the operation of law. The funds might also be administratively eliminated by the Department of Finance with the concurrence of the State Controller’s Office. Whenever a sp

  • Q : Can a corporation contain too much

    Can a corporation contain too much working capital? Describe. A firm can contain too much working capital if this is losing the chance to invest in high returning fixed assets and if this goes beyond the amount of working capital required for r

  • Q : Define Programs Programs : The

    Programs: The activities of an association grouped on the basis of common objectives. The programs are included of elements that can be further classified into tasks and components.

  • Q : Relationship which MPC bear to the size

    Normal 0 false false