When a company borrows money, whether it is to finance an expansion, to cover working capital needs, or to acquire another business, preparation is required. It is important to understand that payments of principal and interest will often be required each month.
1. Interest payments are a tax-deductible expense and [...]

Selling common and preferred shares is essentially a permanent form of financing. It is also a form of financing that requires no repayment. In addition to raising funds, equity may also be issued for the purpose of expanding ownership of the stock, reducing concentration of voting power, and making the stock more liquid for stock [...]

The following types of long-term debt are covered here:
1. Term loans
2. Bonds
3. Debentures
4. Mortgage bonds
5. Convertible bonds
6. Senior debt
7. Subordinated debt
8. Junk bonds

Term Loans. This is the form of long-term debt most frequently used by businesses. It is a loan from a bank to a company that is used to finance expansion efforts. It [...]

Lines of Credit. A line of credit is not a loan, it is a very favorable method of securing a loan. The cliche´ describing this arrangement is ‘‘borrow when you don’t need it so that you will have it when you do.’’

Suppose that a company is considering expansion plans or a major expenditure, to [...]

Inventory Financing. Usually only finished goods and raw materials inventory qualify as a form of collateral. There is no market for work in process. Lenders will usually provide financing in the amount of one-half of the collateral that qualifies. This is a good form of financing to cover the cost of fulfilling a very large [...]

A company that uses debt to finance its business can engage in either short-term or long-term borrowing. Short-term borrowing involves loans with a maturity of one year or less. It is used to cover current cash needs, such as financing growth, seasonal cash flow needs, and major customer orders. The loans in this category are [...]

BORROWING MONEY IS A VERY positive corporate strategy. It helps the company to increase its growth, finance seasonal slowdowns, and invest in opportunities that will ensure its future. However, while the proper financing strategy will support these objectives, the wrong financing strategy will make what otherwise would be excellent corporate programs vulnerable to failure.

Business [...]