Temporary Loan

Short-term Working Capital loan to finance a firm's inventory or receivables. These loans have maturities generally under one year, and are evidenced by a Promissory Note taken or a Warrant issued by the borrower. A temporary loan can be unsecured or secured by a lien on the firm's assets. Working assets acquired through temporary financing eventually will be converted into cash through the firm's trade cycle, when it sells inventory for cash or collects its receivables. See also Collateral Loan; Term Loan.