Financial Glossary
Amortization
What is Amortization?
Amortization is the process of gradually paying off a loan or spreading the cost of an intangible asset over time. It helps businesses manage long-term financial obligations.
How Does Loan Amortization Work?
- A business takes out a loan with fixed monthly payments.
- Each payment covers interest + principal reduction.
- Over time, more of the payment goes toward the principal.
Why is Amortization Important?
- Reduces financial burden by spreading payments.
- Helps with tax planning by deducting depreciation over time.
- Improves financial forecasting by setting fixed repayment schedules.
📌 Related: Business Loans | Budgeting
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