Debentures

• Debentures

  • Plc's can borrow money by selling debentures which are long term.
• Advantages:

  Large amount of capital (equity) can be raised.
• Advantages:

  The company only has to pay interest each month/year.
• Disadvantages:

  If the business fails to make interest payments or repay the debenture, the debentures holder can seize the assets from the business.
• Disadvantages:

  Debenture interest must be paid, even if the business makes a loss.