Permanent Financing

Permanent Financing - When a need arises for a company or individual to purchase or develop something that is not expected to be sold in the next fiscal year, such as office furniture or manufacturing equipment, this is called a long term fixed asset. Often short term financing is required to purchase or develop this asset. Once the asset is constructed or obtained, a long term loan or mortgage is used or a bond is issued to repay the short term financing.  The purpose of this kind of financing is to improve the overall equity of a company or individual in that their over all assets would be greater than their overall liabilities within a given period of time.