State the advantages of term loans as a type long term financing.

      

State the advantages of term loans as a type long term financing.

  

Answers


Lellah
1) The advantage of term loan is flexibility. The borrower deals directly with the bank and so the loan can be tailored to the borrowers needs through direct negotiation. Should the business entity’s requirements change, the terms and conditions of the loan may be renegotiated.
2) Also it does not result in dilution of ownership since no new shares are issued.
3) The interest paid is tax-deductible.
4) Interest commitment is mostly fixed and known and so a business entity can be able to plan for servicing of the loan.


Lellah answered the question on November 8, 2021 at 07:26


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