There are a number of advantages to taking out commercial
loans
Retain Ownership. Instead of raising funds by selling
an interest in your company to an investor, you retain the
current ownership of your company. The lender is only entitled
to an interest return on its loan, not a percentage of the
profits or a share in the company that an investor would
expect.
Financial Flexibility. The proceeds from the loan
can be used for almost any purpose including paying off
current debt to avoid higher interest rates, short repayment
term, or pending balloon payment. A loan also allows you
to preserve your cash and working capital.
Better Cash Flow. A loan gives you access to capital
with minimal up-front payments and the flexibility to design
a loan schedule that suits your needs. You can organize
your loan schedule to match your payments with the projected
cash flows from the proceeds of the funds this will help
you minimise the drain on your working capital.
Borrower is legal owner of equipment. If you decided
to take a loan against your equipment, unlike some other
forms of financing you remain the legal owner of the equipment.
Maximize Financial Leverage. Normally you can
use your refinance most of your assets, real estate, commercial
equipment and vehicles, to arrange for a loan and may free
up cash flow for other pressing needs.
Simplified cash flow management. Loan schedules
are preset, making cash management more predictable.
Tax advantage. Interest payments on your loan
are tax deductible and are made with pre-tax money. Purchases
financed with profits, in contrast, are made with after-tax
money.
