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Advantages of Long Term Debt Capital

Debt instruments like notes payable. There are a few benefits of the long term debt capital and firms and companies are being benefited by the note payable.

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Advantages of Long Term Debt Capital

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  1. Advantages of Debt Instruments – Use of Long Term Debt Capital

  2. What is a note payable? • Debt instruments like notes payable are really beneficial and companies or business organizations that need some operating capital may use or obtain a loan through any of the options of notes payable.

  3. Well, it is basically a written promise where you promise to pay a certain amount of money on a specific future date, whether short term or long term. • However, there are two types of notes payable option available for you—short term and long term. • Short term notes are due within a year and long term notes (LTN) are due after one year.

  4. There are a lot of advantages of the long term one and here are those –

  5. 1.    The ownership interest – • This note payable method offers you the benefit of ownership interest. • That means you don’t have to give away any ownership interest to the lender. • The lender only has an expectation to receive the loan plus interest due but receives no equity ownership in the organization. • You, as a borrower don’t have to worry about providing any other ownership to the lender.

  6. 2.    The interest rate – • This payable method has a fixed interest rate. So you can plan and budget your payment according to the interest beforehand. • And above all, the due date you get is a long term and there are no possibilities of being tied up into any current assets.

  7. That means the risk of loan default gets reduced and the debt capacity increases. • What you benefit from it? Firm’s overall financial stability.

  8. 3.    Tax Deduction – • When you take a loan in interest, it can be paid or can be deducted from your company’s income taxes. • This is the reason when you use the long term option, you get benefited and people find the long term payment option to be quite attractive.

  9. 4.    Less Paperwork – • Long term payable option doesn’t require much paperwork. • Raising long-term debt capital does not require any paperwork to be filed with state and federal authorities. • It also doesn’t require any kind of pre-approval from the authorities and the investors.

  10. These are a few benefits of the long term debt capital and firms and companies are being benefited by the note payable since a long time. • Whether it’s long term or the short term note payable, the instrument can help you grow in your business. • We, “The Hanson Group of Companies” provide you a group of some of the best financial options for you.

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