ACCA F9考试：Medium-Term Finance
1. Bank Loans
Advantages:
The loan will be for a fixed term: no risk of early recall (unlike overdrafts that can be called).
The interest rate may be fixed.
Disadvantages:
Inflexible.
May require security.
May require covenants, which are restrictions on the company (e.g. limits on dividend payments, limits on further borrowing).
2. Leasing
Advantages:
There are many willing providers.
Remains off balance sheet if an operating lease.
Matches finance to the asset.
Very flexible packages available, some of which include maintenance.
Disadvantage:
Can be quite costly.
3. Sale and Leaseback
Under a sale and leaseback, property is sold to an institution, such as a pension fund, and then leased back to the company.
Advantages：
Funds are raised from the sale.
May improve ratios such as return on capital employed (ROCE).
Disadvantages:
No longer own the property and hence cannot participate in any future increase in value.
Risk of lease payments increasing.
4. Mortgage Loans
A mortgage loan is a loan secured by property.
Advantages:
Given the security, the loan will have a lower rate of interest than other debt.
Institutions will be willing to lend over a longer term.
Still participate in the growth of the property's value.
Disadvantage:
Default may result in a key asset being liquidated.
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