Use of loan proceeds Loan proceeds should be used for legitimate business operating purposes Speculative asset purchases and debt substitutions should be avoided. The true need and use of the loan proceeds determines the loan maturity,the anticipated source and timing of repayment, and the appropriate collateral. One common pitfall is to focus too much on collateral and end up financing a firm's long-term needs with short-term notes. 藏的黄香大孝Use of loan proceeds Use of loan proceeds † Loan proceeds should be used for legitimate business operating purposes † Speculative asset purchases and debt substitutions should be avoided. † The true need and use of the loan proceeds determines the loan maturity, the anticipated source and timing of repayment, and the appropriate collateral. † One common pitfall is to focus too much on collateral and end up financing a firm’s long-term needs with short-term notes