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Advantages of using debt finance, Finance Basics
Advantages of Using Debt Finance
Interest on debt is a tax permit able expense and as that it is reduced via the tax allowance.
The cost of debt is fixed regardless of profits created and as such within conditions of debt will be lower of high profits the cost.
It does not call for a lot of formalities to rise and as such it ideal for critical ventures
It is usually self-sustaining in such the asset acquired is required to pay for its cost that is leaving the company along with the value of the asset.
In case of long-term debt, amount of loan declines along with time and repayments reduce its burden to the borrower.
Debt finance does not influence the company's decision as lenders don't contribute at the AGM.
Posted Date: 1/29/2013 4:33:24 AM | Location : United States
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