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Glossary term

Self-Liquidating Loan

Definition

A self-liquidating loan is one that pays itself off from the income produced by whatever it financed.

Technical definition

A self-liquidating loan is credit whose repayment is generated directly by the sale of the financed asset or production it supports.

Why it matters

This structure aligns repayment with revenue, which is why short-term ag loans for crops or feeder livestock are often designed this way.

Example

A loan to buy feeder cattle repaid from selling those same cattle is self-liquidating.

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