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Basically, a borrower takes out a loan used to finance business activities that generate revenue.Then the borrower takes the revenue generated from those business activities and uses it to repay the money that was borrowed to finance the activities.In the modern world, banks perform such a variety of functions that it is not possible to make an all-inclusive list of their functions and services.However, some basic functions performed by the banks are discussed below.

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These loans are intended to finance purchases that will quickly and reliably generate cash.

(ii) Current Deposit Account: These accounts are generally maintained by the traders and businessmen who have to make a number of payments every day.

Money from these accounts can be withdrawn in as many times and in as much amount as desired by the depositors.

A business might use a self-liquidating loan to purchase extra inventory in anticipation of the holiday shopping season.

The revenue generated from selling that inventory would be used to repay the loan.




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