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.
A business might use a self-liquidating loan (or assets) to purchase extra inventory in anticipation of the holiday shopping season.
Savvy investors could identify a trend involving a particular currency and earn enough return to pay for the original purchase and realize a profit as well.
For example, the currency investor could buy a given currency while it is relatively weak, hold onto it until it becomes strong, and then sell it for a substantial profit over the original investment.
Because the building could be leased out to tenants and generate a regular income, it has the inherent ability to eventually pay off the total cost of the original building project.
In like manner, the toll bridge would eventually generate enough revenue to offset the initial investment.
For example, they do not make sense for fixed assets, such as real estate, or depreciable assets, such as machinery.
In many ways, a self-liquidating loan is a synthetic form of a revenue bond with a sinking-fund feature.
"Nothing in this section shall be interpreted to mean that the Secretary of Finance is prevented from adopting a lottery bond scheme whereby, as long as a subscriber holds on to his bond, the same bonds shall be eligible for drawing by lot at certain specified time as per the conditions on issuances: and awards or prizes may be given to said holders whose bonds are drawn, which awards or prizes may be given in addition or in lieu of the interest that the bonds would have earned; and likewise, nothing in this section shall be interpreted to mean that the Secretary of Finance, in the redemption of securities, is prevented from applying the lottery principle by which bonds, drawn by lot, may be redeemed before maturity either at their face value or above.An individual could purchase a house with the intent of leasing the property and creating a monthly stream of revenue.Assuming a suitable tenant is found, the property begins to generate regular income.It is called a self-liquidating bond because the proceeds from the sale of the assets provide the capital with which the issuer may repay the bond.A self-liquidating loan is a form of short- or intermediate-term credit that is repaid with money generated by the assets it is used to purchase.MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No.1081, dated September 21, 1972, and General Order No. 1000, as amended, to read as follows and be made as part of the laws of the land: "Sec. Upon the commendation of the Secretary of Finance, the Monetary Board, and the National Economic Development Authority, the President of the Philippines is authorized to issue, preferably in the Philippines, or abroad if necessary, in the name and in behalf of the Republic of the Philippines bonds, including lottery bonds, in an amount not exceeding two billion pesos to finance public works and projects for economic and social development which have high economic or social rates of returns and which are authorized by law, including expropriation of lands for subdivision and resale to individuals, or to repay or service bonded obligations of the Government incurred for such projects; Provided, however, That investments in such projects; by provinces, cities, and municipalities shall be limited by the paying capacity of the province, city or municipality to be certified by the Secretary of Finance and that the probable income from such projects shall be taken into consideration: And provided, further, That no issue shall be made if eighty per centum of the immediately preceding issue of the same type has not been sold: Provided, finally, That not more than five per centum of this bond issue shall be used to pay government obligations, loans and advances, whether secured or unsecured, guaranteed by the National Government, made by government-owned or controlled financial institutions other than the Central Bank, to government political subdivisions, offices and instrumentalities and/or other loans committed by government-owned and/or controlled financial institutions other than the Central Bank, guaranteed by the Government, that cannot be met on maturity.There are a number of examples of this type of investment activity, ranging from municipal projects to real estate.One example of a self-liquidating asset would be the construction of a building or toll bridge for use in a city or town.is a term that is used to describe any investment in which the acquired stock, bond, property, or other holding has the inherent capability to offset the expense that was incurred in order to acquire the asset.In many cases, self-liquidating assets can go on to generate profits after creating enough return to cover that initial expense.