Monday, May 4, 2009


Nevertheless,the Survey Research Center discovered that borrowing exclusively for working capital occurs most frequently among medium-sized firms.A sizable number of such firms,however,borrow from banks for both working capital and capital expenditures.Among large firms a much smaller percentage borrowed exclusively for working capital,whereas nearly one fifth borrowed only to finance capital expenditures. An additional one fifth of large firms borrowed for both working capital and capital expenditures.
SHORT-TERM, SELF-LIQUIDATING,BUSINESS LOANS Banks are clearly interested in satisfying the credit needs of business firms as the sharp increase in the postwar period in the dollar amount of industrial and commercial loans,as shown in Table 11-1 indicates. Although these business loans may be written with maturities to fit the needs of the borrowing firms,the traditional type of business loan favored by banks was supposed to be the short-term,self-liquidating loan. This is the type of a loan that a retail business might secure from a bank in order to buy inventory before the heavy selling season prior to Christmas or Easter.

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