When an entrepreneur takes out a loan, the amortization schedule outlines how the loan will be repaid over time. This schedule breaks down each payment into principal and interest components. Hereâs how it affects the business:
- Monthly Payments: Regular, predictable payments help in budgeting and financial planning. - Interest Costs: Initially, a larger portion of the payment goes towards interest, but over time, the principal repayment increases, reducing the interest expense. - Debt Reduction: With each payment, the outstanding loan balance decreases, which can improve the businessâs creditworthiness.