Debentures

• Debenture


  This is a loan to a business by an investor with a promise to repay it in a fixed time with a set interest rate and fixed amount

  Lender is given a debenture with a promise form the company to provide regular interest payment and for the loan to be repaid by a specific date (maturity date)

  Companies that borrow offer security to the lender usually over the company’s assets

  Public issue = prospectus lodged with ASIC and traded on the ASX
• + and -


  + fixed interest rate → which makes it safe for the business and the investor due to no fluctuations

  -->higher interest rate than a financial institution

  --> secured against an asset → if the funds can’t be repaid, business may lose the asset