Answer Book question
Finance it if a subsidy scheme requires bank financing, if the loan rate is reasonable, or if paying cash would drain working capital. Pay cash only if the amount is small relative to your reserves and no subsidy is lost. Cash is more valuable in a new business than the interest saved.
Finance it if a subsidy scheme requires bank financing, if the loan rate is reasonable, or if paying cash would drain working capital. Pay cash only if the amount is small relative to your reserves and no subsidy is lost. Cash is more valuable in a new business than the interest saved.
A ₹12 lakh machine. Cash purchase saves ~₹1 lakh a year in interest but forfeits a ₹3.6 lakh subsidy and leaves ₹3 lakh working capital. Financing keeps ₹12 lakh liquid and captures the subsidy.
Debt for productive assets with a long life is normal business finance. Liquidity is survival.
Subsidy linked to financing Interest rate and tenure Working capital after purchase Asset life vs. loan tenure
Debt aversion costing a subsidy and liquidity.
Many Kerala owners pay cash from Gulf savings and lose both subsidy and runway.
Finance ₹12 lakh; subsidy ₹3.6 lakh; keep ₹12 lakh liquid.
A ₹50,000 tool with no subsidy: just buy it.
Check subsidy linkage Compare liquidity outcomes Decide
I have ₹25 lakh. Should I buy a machine or keep working capital? Should I apply for subsidy before buying machinery?
Loans, grants & subsidies
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