Explain the term ‘debt financing’. How are Banks an important source of debt financing?
Answers
Answer:
Definition of 'Debt Finance' Definition: When a company borrows money to be paid back at a future date with interest it is known as debt financing. It could be in the form of a secured as well as an unsecured loan. A firm takes up a loan to either finance a working capital or an acquisition.Banks are the most obvious sources of borrowed funds. ... They usually provide payment terms and interest rates comparable to a commercial bank but require a business to have more assets available as collateral. Trade credit is another common form of debt financing.
Explanation:
when a company borrows money to be paid at a furture date with interest it is known as debt financing.
banks are an important source of debt financing becox they provide payment terms and interest rates comlarable to a commercial bank but require a business to have more assets available as collateral