Debt instruments like notes payable are really beneficial and companies or business organizations that need some operating capital may use or obtain a loan through any of the options of notes payable.

What is a note payable?

Well, it is basically a written promise where you promise to pay a certain amount of money on a specific future date, whether short term or long term. However, there are two types of notes payable option available for you—short term and long term. Short term notes are due within a year and long term notes (LTN) are due after one year.

There are a lot of advantages of the long term one and here are those –

1.    The ownership interest – This note payable method offers you the benefit of ownership interest. That means you don’t have to give away any ownership interest to the lender. The lender only has an expectation to receive the loan plus interest due but receives no equity ownership in the organization. You, as a borrower don’t have to worry about providing any other ownership to the lender.

2.    The interest rate – This payable method has a fixed interest rate. So you can plan and budget your payment according to the interest beforehand. And above all, the due date you get is a long term and there are no possibilities of being tied up into any current assets. That means the risk of loan default gets reduced and the debt capacity increases. What you benefit from it? Firm’s overall financial stability.

3.    Tax Deduction – When you take a loan in interest, it can be paid or can be deducted from your company’s income taxes. This is the reason when you use the long term option, you get benefited and people find the long term payment option to be quite attractive.

4.    Less Paperwork – Long term payable option doesn’t require much paperwork. Raising long-term debt capital does not require any paperwork to be filed with state and federal authorities. It also doesn’t require any kind of pre-approval from the authorities and the investors.

These are a few benefits of the long term debt capital and firms and companies are being benefited by the note payable since a long time. Whether it’s long term or the short term note payable, the instrument can help you grow in your business. We, “The Hanson Group of Companies” provide you a group of some of the best financial options for you.