Liquidating loan self

Generally, a borrower must have a high credit rating to receive an unsecured loan.Commercial paper is an example of an unsecured loan.Businesses use term loans for month-to-month operations or to purchase fixed assets such as production equipment.An unsecured loan is issued and supported only by the borrower's creditworthiness, rather than by some sort of collateral.Many borrowers must file regular financial statements, usually at least annually.Lenders also usually require proper maintenance of the loan collateral property.Reasons for needing a cash flow loan could be seasonal-demand changes, business expansion or changes in the business cycle.

Self-liquidating loans are not always a good credit choice.This type of loan is usually short-term in nature and is almost always backed with some sort of collateral.Commercial loans usually charge flexible rates of interest that are tied to the bank prime rate or else to the London Interbank Offered Rate (LIBOR).For example, they do not make sense for fixed assets, such as real estate, or depreciable assets, such as machinery.Another type of loan related to a business's assets is an , a short-term loan that is typically repaid by converting an asset, usually inventory or receivables, into cash.

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