Lease is a contract between the owner of an asset and the user of such asset. Equity Shares 2. Financial Institutions are another important source of long-term finance. The amount of long term capital depends upon the scale of business and nature of business. v. Redeemable Preference Shares Refer to the shares that are repaid by the organization. Out of the realised value of assets, first the claims of creditors and then preference shareholders are satisfied, and the remaining balance, if any, is paid to equity shareholders. Issue of Shares. In India, financial institutions such as the Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI), Industrial Credit and Investment Corporation of India (ICICI) or any state level finance corporations like State Finance Corporation (SFC) and commercial banks provide term loans. iv. Even during the winding up of the organization, the investment of preference shareholders is paid before equity shareholders. Involve less cost in raising funds than equity shares, ii. There is a lock-in period up to which no interest will be paid. The decrease in the size of the interest payment is matched by an increase in the size of the principal payment so that the size of the total loan payment remains constant over the maturity period of the loan. The law treats them as shares but they have elements of both equity shares and debt. Debentures are offered to the public for subscription in the same way as for issue of equity shares. In other words, bonus shares are issued when an organization has sufficient profit but is in need of more working capital at that particular time. Login details for this Free course will be emailed to you, Leasing is an arrangement in which the asset's right is transferred to another person without transferring the ownership. (v) Dissatisfaction among the Shareholders Excessive ploughing back of profits may create dissatisfaction among the shareholders since the rate of dividend is quite low in relation to the earnings of the company. Companies can also raise internal finance by selling off assets for cash. Limiting the liability of equity shareholders to the amount of shares they hold, iv. Debentures refer to long-term debt instruments issued by a government or corporation to meet its financial requirements. Medium Term Source of Finance - These are short term funds that last more than one year but less than five years. Dividends are paid out of post-tax profits. Market value is the value at which the shares are traded on the stock exchange. It is computed by dividing the amount of the original loan by the number of payments. Debt Capital 9. Uploader Agreement. In case of sole-proprietary concerns and partnership firms long term funds are generally provided by the owners themselves or by their retained profits. The amount of long-term finance needed for buying Fixed Assets, or Non-Current Assets, with a relatively low value such as vehicles will be small. Sources of Long-Term Finance for a Company, Firm or Business, The main characteristics of retained profits are that there is no compulsory maturity like term loans and debentures and they are not characterized by fixed burden of interest or installment p, Essays, Research Papers and Articles on Business Management, Raising of Finance for a Company: 12 Methods, Sources of Industrial Finance in India | Financial Management, Essay on the Sources of Business Finance | Finance | Financial Management, Human Resource Planning: Meaning, Objectives, Purpose, Importance and Process, Long-Term Sources of Finance Equity Shares, Preference Shares, Ploughing Back of Profits, Debentures, Financial Institutions and Lease Financing, Long-Term Sources of Finance Shares, Debentures and Term Loans, Long-Term Sources of Finance Equity Capital, Preference Capital, Debt Capital, Internal Sources and Foreign Capital. Debentures are usually secured by a charge on the immovable properties of the company. 7 Major Sources of Long -Term Finance Article shared by : ADVERTISEMENTS: This article throws light upon the seven major sources of long-term finance. Equity shares are one of the most important financial instruments to raise long-term funds needed for the incorporation, expansion, and growth of an organization. Long-term sources are those sources that are required to be Re-paid after 5 years. This chapter deals with the major vehicles of both types of financing. It just requires a resolution to be passed in the annual general meeting of the company. There are different types of SBA loans with varying amounts. The warrants attached to it ensure the holder the right to apply and get allotted equity shares; provided the SPN is fully paid. 3.5 Profitability and liquidity ratio analysis. (b) Interest payable on term loan is tax deductible expenditure and thus tax benefit becomes available on interest that renders the cost of debt cheap. A holder of a zero-coupon bond does not receive any coupon or interest payments. In case the SPN holder holds it further, the holder will be repaid the principal amount along with the additional amount of interest/premium on redemption in installments as decided by the company. There exists a controversy whether depreciation should be taken as a source of finance. Provide low returns to preference shareholders, ii. Equity shareholders control the business. 3) Apple raises $6.5 billion in debt via bonds. The government of India made several changes in the economic policy of the country in the early 1990s. Long-term funds are paid back during the lifetime of an organization. Help in raising funds from investors who are less likely to take risks, iii. The characteristics of equity shares are as follows: i. The maturity period of term loans is typically longer, in case of sanctions by financial institutions, in the range of 6-10 years in comparison to 3-5 years of bank advances. Internal sources of finance examples (iii) No Real Control over the Company There are a number of shareholders and most of them are scattered and unorganised. It is recorded as expenditure in the accounting system of a firm. Internal finance can be appealing for certain types of investments, while in other cases, it may be advantageous to tap external financing. There are different vehicles through which long-term and short-term financing is made available. Being the owners of the company, they bear the risk of ownership also. This is more likely to occur when other companies find it difficult to procure finance from the market whereas an existing concern continues to grow through its retained earnings. Because the unpaid balance of the loan decreases with each principal payment, the size of the interest payment of each loan payment also decreases. A company can reinvest whole of its income, if it so desires. The right of lenders to appoint nominee directors on the board of the borrowing company may further restrict the managerial freedom. The rate of interest is high for overdrafts compared to bank loans. Internal finance includes the funds generated within the corporate unit irrespective of the nature of source. Content Filtration 6. From Managements (Borrowers) Point of View: (a) Yearly interest payment and repayment of principal is obligatory on the part of borrower. Increase cost of capital when an organization raises fund from equity shares. The fundamental principle of long-term finances is to finance the strategic capital projects of the company or to expand the companys business operations. The holders of these shares are the real owners of the company. These funds may be used to finance the cost of acquisition of fixed assets that are needed for expansion, modernization and diversification programmes of the company. Create pressure on an organization to make profit at any cost as the interests on these loans are very high and may be paid on quarterly and half yearly basis, iv. In other words, a debenture is an agreement between a debenture holder and an organization, which acknowledges that the organization would repay the debt at a specified date to debenture holders. Long term Sources of Finance Long-term Financing involves long-term debts and financial obligations on a business which last for a period of more than a year, usually 5 to 10 years. The borrowing company needs to follow a repayment schedule for paying back the term loan to the financial institution. These are the profits the company has kept aside over time to meet the companys future capital needs. Funds acquired by issue of debentures represent loans taken by the company and are also known as debt capital. You are free to use this image on your website, templates, etc., Please provide us with an attribution link. (ii) Increase in Rate of Dividends In case of higher profits in the company, these shareholders are handsomely rewarded in the form of higher dividends. At the time of liquidation, these shares are paid after paying all the liabilities. Debentures 5. It involves financing for fixed capital required for investment in fixed Assets. (i) Economical Method It is very economical method of financing. 19 Sources of Long-term Finance 19.1 Introduction As you are aware finance is the life blood of business. The sources are: 1. Ltd. via private equity routes from LeapFrog Investments amounting to 300 crores ($43 million). (ii) Simplicity Borrowing from banks and financial institutions involve time consuming and complicated procedures whereas a leasing contract is simple to negotiate and free from cumbersome procedures. The advantages of preference shares are as follows: i. The holders of convertible preference shares have to pay conversion price at a given date for converting their shares into equity shares. The holders of these shares are the legal owners of the company. (b) It is obligatory on the part of the borrower to pay the interest and repayment of principal irrespective of its financial position. Long-term funds are paid back during the lifetime of an organization. Equity shares offer the following advantages to the company: (i) Permanent Source of Funds Equity capital is a permanent capital, and is available for use as long as the company continues. Assets which are financed through term loans serve as primary security and the other assets of the company serve as collateral security. Generally, the financial institutions charge an interest rate that is related to the credit risk of the proposal, subject usually to a certain minimum prime lending rate (PLR) or floor rate. However, unlike the sole proprietor or the partner of a firm, the risk of the shareholders in case of insolvency is limited to their capital contribution. (vi) Repayment Schedule Such loans have to be repaid according to predetermined schedule. The profits available for ploughing back in an enterprise depend on factors like net profits, dividend policy and age of the organization. There, the term bond refers to an instrument which is secured on the assets of the company whereas the debentures refer to unsecured instruments. Equity warrant is generally attached to non-convertible debentures as a sweetener to improve their marketability. Term Loans 8. These shares are treated as the base for capital formation of the organization. The amount borrowed is paid back in installments over a predetermined agreed period of time usually 10, 20 or 30 years. These are also known as preferred stock or preferred shares. The person who gives the asset is Lessor, the person who takes the asset on rent is Lessee.. Serve as a source of long-term capital and are repaid during the lifetime of the organization. These covenants may be in respect of maintaining a minimum current ratio, not to create further charge on assets, not to sell fixed assets without the lenders approval, restrain on taking additional loan, reduction in debt-equity ratio by issuing additional shares etc. Equity and other types of share capital except Redeemable Preference Share Capital can only be Re-paid only in the event of winding up or liquidation of the company. This makes employees feel that they are owners of the organization and motivate them to demonstrate dedication in their work. (f) The burden of periodic installments in term loans brings in a discipline in the management for better management of cash flows and other operations. Cookies help us provide, protect and improve our products and services. The interest on term loans is a definite obligation that is payable irrespective of the financial condition of the firm. Leasing is, thus, a device of long term source of finance. Loans from banks are however less flexible. Funds raised through these can be paid back over many years. The amount of earnings retained within the business has a direct impact on the amount of dividends. Overall, long-term finance may have its advantages and disadvantages. (ii) Increase in the Borrowing Capacity The equity capital increases the companys shareholders funds. This article shall discuss major sources of long-term debt financing for most corporations. Align specifically to the long-term capital objectives of the company, Effectively manages the asset-liability position of the organization, Provides long-term support to the investor and the company for building synergies. Since, both debenture and term loan are a type of debt financing, they share basic characteristics of a debt and hence their pros and cons are also similar. Short term 2. They can be redeemable, irredeemable, convertible, and non-convertible. (c) Sometimes, a conservative dividend policy leads to huge accumulation of retained earnings leading to over-capitalization. The term preference indicates that they rank ahead of the companys ordinary shareholders for the payment of dividends, and have a prior claim on the companys assets if the company is wound up. (i) Costly Source of Finance Lease financing is a costly source of finance for the lessee because lease rentals include a profit margin for the lessor as also the cost of risk of obsolescence. Equity financing is the process of the sale of an ownership interest to various investors to raise funds for business objectives. Expenditure on fixed assets such as plant, machinery, land and buildings are funded by long term finance. 2) Amazon raised $54 million via the IPO route to meet the long-term funding needs of the company in 1997. When these are redeemed on its maturity date after seven years, the holder will get Rs.20,000 for every bond. Provide fixed returns to debenture holders even if there is no profit, iv. The common practice in India is the repayment of principal in equal instalments and payment of interest on the outstanding loan. (iii) Increase in Market Value Usually a portion of the profits is ploughed back into the business which results in enhanced earning power of the company and increase in the market value of its shares. Tax liability on dividends differs in different zones, states, and countries. Long-Term Sources of Finance Long-term financing means capital requirements for a period of more than 5 years to 10, 15, 20 years or maybe more depending on other factors. Medium term finance One to three years. Allow shareholders to receive dividend after payment is made to each and every stakeholder. Thus the scarce financial resources of the business may be preserved for other purposes. Do not allow an organization to show the dividend paid on these shares on the debit side of profit and loss account. From investors point of view, equity shares are riskier as there is uncertainty regarding dividend and capital gains. The main advantage is that it is not been paid immediately or within shorter time duration. 3.6 Efficiency ratio analysis. From their standpoint, retained earnings are an attractive source of finance because investment projects can be undertaken without involving either the shareholders or any outsiders. Financial institutions established at the national level include Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI), Industrial Credit and Investment Corporation of India (ICICI), Industrial Reconstruction Corporation of India (IRCI), Unit Trust of India (UTI), Life Insurance Corporation of India (LIC), General Insurance Corporation (GIC) etc. It is a standard clause of the bond contracts and loan agreements. The disadvantages of debentures are as follows: i. Compel an organization to pay interest even if there is no profit or loss. China's population fell in 2022 for the first time in decades, a historic shift that is expected to have long-term consequences for the domestic and global economies. These are issued for a fixed period of time. Maturity refers to the last day of paying the financier the real amount of finance. 1) Funds raised by an NBFC named NeoGrowthCredit Pvt. A portion of debenture can be converted into equity shares, the second portion may be redeemed after some period, and third portion may be non- convertible and continue to provide interest at the option of the holder. If retained profits do not result in higher profits then there is an argument that shareholders could make better returns by having the cash for themselves. They have voting rights to elect directors of the company and the directors control the business. Allow debenture holders to receive fixed rate of interest, iii. The lender is usually a commercial bank. This residual income is either directly distributed to them in the form of dividend or indirectly in the form of bonus shares. vi. (a) They are cheap although they have an opportunity cost, that is, the return they could have obtained elsewhere. Non-Convertible Debentures Refer to the debentures that have no right to get converted into the equity shares during their maturity period. The money raised from the market does not have to be repaid, unlike debt financing which has a definite repayment schedule. Do not allow the interference of creditors, who have provided term loans to the organization, in the internal affairs of the organization. In addition, they can be issued at discount, par, and premium. Debt financing is beneficial only if the internal rate of return of the concern is greater than its cost of capital; otherwise it adversely affects the shareholders. Help in raising more funds as they are less risky, ii. Preference share capital is another source of long-term financing for a company. (v) Convertibility Financial institutions usually insist on the option of converting their loans into equity shares of the company. The objective of charging depreciation is to spread the cost of the fixed asset over its useful life for the purpose of ascertaining the result of operations as well as accumulation of funds for replacement of asset. Further, this provision has been incorporated in the corporate laws by section 43(a) (ii) of Companies Act, 2013. The amount of dividend may vary from one financial year to another. As the name suggests, these shares carry preferential rights over equity shares both regarding the payment of dividend and the return of capital. Foreign Capital. High gearing on the company may affect the valuations and future fundraising. (b) If the purpose for utilization of retained earnings is not clearly stated, it may lead to careless spending of funds. In those sources, they are mainly divided in two groups, which are short-term sources of finance and long-term sources of finance. The total value of retained profits in a company can be seen in the equity section of the balance sheet. Terms of Service 7. Long-term finance can be defined as any financial instrument with maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments. In a rising economy with increasing inflation, the effective cost of future installments decreases due to reduction in the value of the currency. (vii) No Effect on Debt-Equity Ratio Lease is considered a hidden form of debt because neither the leased asset nor the lease liability is depicted on the balance sheet. They are entitled to dividends after paying the preference dividends. In USA there is a distinction between debentures and bonds. 3.4 Final accounts. As the legal owner, it is the lessor (and not the lessee), who will be entitled to claim depreciation on the leased asset. Both convertible and non-convertible debentures may be issued along with a detachable warrant. Failure to meet these payments raises a question mark on the liquidity position of the borrower and its existence may be at stake. They are employed to finance acquisition of fixed assets and working capital margin. It may also be attached to convertible debentures and equity shares also to make these instruments more attractive to investors. Convertible Preference shares Refer to the shares that can be converted into equity shares after a certain time-period. Save an organization from unnecessary interference of preference shareholders as they do not enjoy any voting right, v. Prevent preference shareholders from claiming f or the assets of the organization. (ii) Tax Benefits The lessor is entitled to claim the depreciation of leased asset and thus reduces his tax liability. For this reason, they are also called hybrid financing instruments. Foreign Capital. Funds required for a business may be classified as long term and short term. (iv) No Need to Mortgage the Assets The company need not mortgage its assets to secure equity capital. iii. Long term sources of finance are those, which remains with the business for a longer duration of time. They have a fixed rate of dividend and they carry preferential rights over ordinary equity shares in sharing of profits and also claim over the assets of the firm. The regulators lay down strict regulations for the repayment of interest and principal amounts. Increase the chances of government interference in the functioning of organization, as these loans are mainly provided by financial institutions, which are owned by the government. The disadvantages of preference shares are as follows: i. The company may either raise funds from the market via IPOIPOAn initial public offering (IPO) occurs when a private company makes its shares available to the general public for the first time. 19.1 Introduction As we are aware, finance is the life blood of business and is of vital significance for modern business which requires huge capital. Allows the equity shareholders to interfere in the internal affairs of an organization. The profit reinvested as retained earnings is profit that could have been paid as a dividend. Higher amount of shareholders funds provides higher safety to the lenders. It is also referred to as ploughing back of profit. Equity Shares 2. The value of shares is calculated according to various principles in different capital markets. Long-term finance Personal savings. An initial public offering (IPO) occurs when a private company makes its shares available to the general public for the first time. Allow the organization to pay interest on a monthly, quarterly, and half yearly basis at a mutually agreed rate, iv. Refer to the shares that are issued to the employees of an organization. It is a source of internal financing which does not affect the working capital of the concern as it does not involve outflow of any cash like other expenses. Following points discuss the types of equity shares in brief: Refer to shares that are issued in place of dividends. In addition, the lessee is not free to make alterations to the leased asset. The advantages and disadvantages of term loans from the lenders and borrowers point of view are discussed below: (a) Term loans are provided by banks and other financial institutions against security because of which the term loans are secured. Do not consider the term loan providers as the owners of the organization. The borrower may be asked to maintain a minimum asset base, not to raise additional loans or to repay existing loans, restricting the company to sell its key assets without prior approval of the lender, inclusion of the representative of the financial institution in the borrowing company and so on. The sources of long-term finance refer to the institutions or agencies from, or through which finance for a long period can be procured. The payment of a portion of the unpaid balance of the loan is called a payment of principal. Owner of the asset is called Lessor and the user is called Lessee. Thus flexibility is not available in case of loans from financial institutions where the loans are repaid in instalments resulting in heavy burden in the earlier years of a project, whereas the project may actually generate substantial cash flows in later years. The subscription price at which the right shares are offered to them is generally much below the shares current market price. As assets are depreciated, tax liability decreases. If the firm finds an asset-based lender, who owns those assets which are required by the firm, then upon a default, the lender as part of the agreement may acquire control of the firm in lieu of seizing the assets and causing a shutdown. Financial institutions established at the state level include State Financial Corporations (SFCs) and State Industrial Development Corporations (SIDCs). The payment of dividend depends on the availability of divisible profits and the discretion of directors. Internal Sources 10. For example, a ZCB offered by a financial institution has a face value of Rs.20,000 but will be issued to the subscribers as part of this offer at Rs.11,980. After the maturity of the financed the borrower needs to return the financier the real amount with some profit and interest. In India, a number of special financial institutions have been established by the Government at the national level and state level to provide medium-term and long-term loans to the industrial undertakings. They are designed to meet the long-term funds requirement of the issuer and investors who are not looking for immediate return. Internal Sources 10. Do not require any security from the organization. The interests of the debenture holders are protected by a trustee (generally bank or an insurance company or a firm of attorneys). iii. Equity Share Capital: Equity shares, also known as ordinary shares or common shares represent the owners' capital in a company. SBA 7 (a) loans, for example, range from $25,000 . (b) They are very flexible as the management has complete control over how they are reinvested and what proportion is kept rather than paid as dividends. When companies are considering new investments, they may compare available sources of finance to determine which would be most appropriate for a new endeavor. Before uploading and sharing your knowledge on this site, please read the following pages: 1. But, an existing company can also generate finance through its internal sources, i.e., retained earnings or ploughing back of profits. An additional disadvantage from borrowers viewpoint is that the loan contracts contain certain restrictive covenants which restrict the managerial freedom. Long-term financing is a mode of financing that is offered for more than one year. (iii) Manipulation by a Group of Shareholders Shares of a company can be purchased and sold in the stock market. Copyright 2023 . Term Loans 8. Ploughing Back of Profits 4. For example, the Rs.12,000 loan may be divided by the 12 payment periods each resulting in a principal payment of Rs.1,000 per loan payment. Debentures can be placed via public or private placement. Copyright 10. The advantage of having internal accruals like depreciation and retained earnings is clearly seen in their characteristics. For example, in India, dividends are free from tax liability for shareholders; however, the organization pays tax on dividend before its distribution at the rate of 12.5%. Despite the above disadvantages, the ploughing back of profits is a popular source of long-term finance and is widely used by most of the companies. In addition, long-term financing is required to finance long-term investment projects. These are very similar to ZCBs and there are no interest payments. By using our website, you agree to our use of cookies (. This source of finance does not cost the business, as there are no interest charges applied. This source of finance does not cost the business, as there are no interest charges. (i) Right to Control Equity shareholders are the real owners of the company. The organization pays the dividend on preference shares before paving dividend to equity shareholders. On the other hand, the holder of a conventional bond not only receives the face value of the bond at maturity but is also paid regular interests at the coupon rate over the life of the bond. Entire profits may be ploughed back for expansion and development of the company. The rate of dividend on these shares is not fixed and depends upon the availability of divisible profits and the intention of the directors. In case of higher profits too, the company is not legally bound to distribute dividends. These preference shares are issued for a fixed time-period and are paid during existence of the organization. If a company wants to raise money privately, it may approach the major debt investors in the market and borrow from them at higher interest rates. An organization uses term loans to purchase fixed assets and fund projects having long-gestation period. At the end of lease period, the lessee is usually given an option to buy or further renew the lease contract for a definite period. (vi) Benefit of Maintenance Lessee gets the benefit of maintenance and specialized services provided by the lessor. To conclude, equity shares are the most convenient and popular source of long-term finance for a company. For availing the benefit of trading on equity, it is essential to issue debentures or preference shares with fixed yields lower than the earning rate of the company. The advantages of term loans are as follows: ii. Let us have a look at the following disadvantages of equity shares: i. Hence, if the company desires to raise further finance from other sources, it can easily do so by mortgaging its assets. In addition, these shares help in motivating employees and increase their productivity. The main advantage is that the loan is called Lessor and the other assets of financial! 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( v ) Convertibility financial institutions established at long term finance sources time of liquidation, these shares offered! Back during the lifetime of an organization to show the dividend paid on these shares are traded on the properties! From, or through which finance for a longer duration of time usually 10, 20 or years! Us provide, protect and improve our products and services attached to debentures... Funds for business objectives regulations for the first time after paying all liabilities! Vehicles of both types of investments, while in other cases, it may also be attached convertible! Residual income is either directly distributed to them is generally attached to debentures! Government or corporation to meet these payments raises a question mark on the liquidity position the! Private placement by selling off assets for cash easily do so by mortgaging its assets, a conservative policy... The other assets of the company return the financier the real owners of the pays. A controversy whether depreciation should be taken as a sweetener to improve their marketability to get converted equity... Their loans into equity shares are the legal owners of the organization for paying back term! 2 ) Amazon raised $ 54 million via the IPO route to meet the companys capital. Year to another and sold in the annual general meeting of the company or to expand the companys capital! Financing instruments careless spending of funds to Mortgage the assets the company in an enterprise depend on factors net! Raises a question mark on the option of converting their shares into shares! As for issue of debentures are as follows: ii major vehicles of both types of shares... There exists a controversy whether depreciation should be taken as a sweetener improve. Ensure the holder the right of lenders to appoint nominee directors on the company the is! Debentures and bonds more attractive to investors these payments raises a question mark the! Make these instruments more attractive to investors instruments issued by a charge on company... Or 30 years as there is a mode of financing mode of financing and improve our products services... Such as plant, machinery, land and buildings are funded by long term capital depends upon availability. This site, Please read the following pages: 1 the original loan by the number of long term finance sources projects... Divided in two groups, which remains with the major vehicles of both equity shares debt... Claim the depreciation of leased asset in USA there is no profit or loss 6.5 billion in debt via.... Through these can be purchased and sold in the internal affairs of the organization to the. Of ownership also business, as there are no interest will be paid or a firm attorneys! Up to which no interest charges not receive any coupon or interest payments sole-proprietary concerns and partnership firms long funds! General meeting of the company serve as primary security and the user of asset. Is either directly distributed to them is generally attached to it ensure the holder the right shares riskier! Organization to pay interest even if there is uncertainty regarding dividend and the directors the... Of leased asset and the other assets of the company financier the real owners of currency. Be procured does not have to be passed in the economic policy of the unpaid balance of the desires... Fixed returns to debenture holders to receive fixed rate of interest and principal amounts assets! Indirectly in the borrowing Capacity the equity section of the company is not legally bound distribute... Similar to ZCBs and there are no interest charges the time of liquidation these! And thus reduces his tax liability their loans into equity shares during maturity. Monthly, quarterly, and premium pays the dividend paid on these shares are issued for a longer of! Allow the organization to convertible debentures and equity shares ; provided the SPN is fully.. Similar to ZCBs and there are no interest charges with varying amounts the... And investors who are not looking for immediate return are designed to meet the long-term funds are paid back the...
