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Second Priority Senior Secured Floating Rate Notes


Abstract

A company uses debt financing for working capital or expenditures. It does this by selling bonds or notes, usually to individuals or institutional investors who become creditors and in exchange for the loan receive the principal and interest on the loan. Unlike with equity financing, the company does not give up part of the company. Some of the advantages to debt financing include: The bank or lending institution (such as the Small Business Administration) has no say in the way you run your company and does not have any ownership in your business; the business relationship ends once the money is paid back; the interest on the loan is tax deductible; loans can be short term or long term; and the principal and interest are determined so they can be budgeted for.