Long Term Financing
Provides information on long term financing including financing sources and products.
What is long term financing?
Long term financing provide capital deficit businesses funds for the period over 1 year. It contrasts to short term financing because short term financing provides funds for the period of 1 year or less
Whether an established corporation or new business entity it is common that many small and large companies have some kind of debt throughout the life of their business.
These businesses normally turn to lenders not only to expand their companies or to purchase equipment, but also to finance operating capital to even out cash flow.
What is Long-Term Debt Financing used for can include:
Large Capital Equipment Purchases
Large Scale Construction Projects
Expansion of Facilities
Corporations Vs Companies
Depending on what type of business entity you are. Which could be either a sole proprietorship, partnership or corporation can affect the debt products available for the business.
Non-Corporations are limited to using debt finance while Corporations can use both debt and equity products in their long term financing strategies.
Where does the financing come from?
The basic sources of long term financing products depending on the business entity are from:
Types of Long term debt products include :
Secured and unsecured notes
Fixed deposit loans
Interest rates swaps
Forward rate agreements (FRAs)
Interest only futures
Option on future contracts.
Ross Thompson Christensen Westerfield Jordan, 'Fundamentals of Corporate Finance', 2nd edition, 2001 , 502-534