Sunday, May 26th 2019

What is Financing?

Financing is the act of business borrowing the money to aqcquire some asset. Financing is often chosen by the business if ultimately this is a long term asset that they want to keep and if the borrowing costs are favorable.

Often financing is offered by the commercial seller. Both equipment sales and commercial sales depend on the seller lending the funds to the buyer. Often banks can also be used if the scope is large enough to warrant it but the seller often uses the favorable financing terms to get business from their competition.

At the borrower end, it is an advantage because with ownership of the land, the business is often allowed tax breaks to depreciate the land or equipment and ultimately the asset may outlast the length of the financing and become an unencumbered asset.

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