The gradual paydown of a loan balance through scheduled payments over time.
For example, a plumbing company borrows $60,000 over 5 years at 7% interest. The loan is amortized into 60 monthly payments of roughly $1,188, with each payment gradually shifting from mostly interest in the early months to mostly principal repayment toward the end.
Why it matters: It allows businesses to spread out the cost of an expensive asset or loan, making cash flow more predictable and manageable.
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