Borrowed funds are generally referred to as loans

Borrowed funds are generally referred to as loans

The process of using borrowed, leased or “joint venture” resources from someone else is called leverage. Using the leverage provided by someone else’s capital helps the user business go farther than it otherwise would. For instance, a company that puts up $1,000 and borrows an additional $4,000 is using 80% leverage. The objective is to increase total net income and the return on a company’s own equity capital.

Long-term loans are those loans for which repayment exceeds five to seven years and may extend to 40 years

· in payment terms, e.g. instalment versus single payment · in period-of-payment terms, e.g. short-term versus intermediate-term or long-term · in the manner of its security terms, e.g. secured versus unsecured · in interest payment terms, e.g. …