The revenue generated from selling that inventory would be used to repay the loan.
More recently, however, bank examiners have observed several community banks financing potentially riskier projects.
Over the past several years, examiners have observed a shift in smaller project financing away from capital markets to financial institutions.
During the Great Recession, some municipalities either lost their investment ratings or saw their bond insurance premium costs increase; therefore, the cost of issuing debt securities in the capital markets increased.
Various types of loans are made directly or indirectly to municipalities.
These loans are repaid through general cash flows or through specific revenue streams, such as water and sewer fees or stadium and parking fees.
A type of short- or intermediate-term credit that is repaid with money generated by the assets it is used to purchase.