Closed End Loan
What does it mean
A Closed End Loan is a loan where the borrower is not able to re-advance principal that has been previously paid down.
Why does it matter
A Closed End Loan can be a good option for financing items that have a high upfront cost and provide the borrower benefits over time. An example of this type of item would be equipment. The equipment has a high upfront cost, but the business benefits from its presence into the future while the equipment is used. By financing this purchase with a closed end loan, the cash flow cost of the equipment is matched with its corresponding benefit.
Other Relevant Terms
Want to Master Banking's Favorite Ratio?
The Debt Service Coverage Ratio (DSCR) is one of banking's favorite ratios. Want to ace it without breaking a sweat? No problem! We've got some simple, no-fuss pointers that will help you nail this ratio every time. You've got this!
Get the Cheatsheet NowNot Finding What You Are Looking For?
Let me know what terms, ratios or content you want to see covered.
Request Term or Ratio
Am I missing a key term or ratio? Let me know what you want to see covered.
Request Content
Do you have a topic idea you'd like to see covered? Send it my way.
Checkout Courses
Enhance your skills through a deeper understanding of your customers' businesses.
A bit about me
Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
