how are long term rates beneficial to business houses?
Answer (1)
2nd May, 2020
Hello aspirant
Short term loans to cover cash flow problems can be hard to come by this. This could cause business to be unable to deliver goods and services to their customers because they don't have the cash to continue operating.
When interest rate rise , bank charge more for business loans. This means you will need to use more of your earnings to pay interest on your loans which decrease profit .
But in long long term loans you will have to pay less interest so you will get more benefits. You will have money for rotation of your business.
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