Acquisition Loan
A loan given to a company to purchase a specific asset or to be used for purposes that are laid out before the loan is granted. The acquisition loan is typically only able to be used for a short window of time, and only for specific purposes.
Once repaid, funds available through an acquisition loan cannot be reborrowed as with a revolving line of credit at a bank. Investopedia Says:
Acquisition loans are sought when a company wants to complete an acquisition for an asset but doesn't have enough liquid capital to do so. The company may be able to get more favorable terms on an acquisition loan because the assets being purchased have a tangible value, as opposed to capital being used to fund daily operations or release a new product line. Related Terms:
Accretive Acquisition
Credit Facility
Dilutive Acquisition
Revolving Credit
Undercapitalization |