Lender Q&A: Is it wise to amortize equipment over a 20-year loan?

Thursday, May 22, 2014 / Published in Featured News, Lender Q&A
Lender Q&A: Is it wise to amortize equipment over a 20-year loan?

 

 

Question: Is it wise to amortize equipment over a 20-year loan?

Answer by Jim Conroy, Senior Vice President
 
 
 
  
The ability to stretch the term of your financing lowers your monthly debt service payments dramatically. If your company is growing, the 20-year term financing allows you to better manage cash flow to support growth in the short term.  Cash flow from the company can be used to help generate more sales (more employees, inventory, etc.) rather than be used to retire shorter-term debt.  Since most borrowers seeking 504 financing are in the midst of an expansion, it is wise for them to amortize debt for equipment over as long a term as possible.
 

 

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