Net debenture proceeds refer to the funds obtained from the issuance of debentures that are specifically allocated to cover eligible project costs. These costs exclude any administrative expenses. In simpler terms, net debenture proceeds are the actual money available for financing a project after deducting costs that are not directly related to the project itself.
Net debenture proceeds are commonly used in the context of business financing, particularly under the Small Business Administration's (SBA) 504 loan program. This term is relevant in various legal practices, including business law and finance. It is important for businesses seeking funding to understand how these proceeds can be utilized for specific project costs, ensuring compliance with legal requirements. Users can manage related forms and procedures with the help of legal templates available through platforms like US Legal Forms.
Here are a couple of examples of abatement:
Example 1: A small business issues debentures to raise funds for purchasing new equipment. The net debenture proceeds are used to cover the cost of the equipment, while any fees associated with issuing the debentures are not included.
Example 2: A company raises capital through debentures to renovate its office space. The funds received after deducting non-project related expenses are considered net debenture proceeds and can be used for the renovation costs. (hypothetical example)
Net debenture proceeds are primarily governed by the regulations set forth in 13 CFR 120.802, which outlines the rules for the SBA's Development Company Loan Program (504). This regulation defines how proceeds should be allocated and used in compliance with federal guidelines.
| Term | Definition | Difference |
|---|---|---|
| Debenture | A type of debt instrument that is not secured by physical assets or collateral. | Net debenture proceeds refer specifically to the usable funds after deducting non-eligible costs. |
| Bond | A fixed income instrument that represents a loan made by an investor to a borrower. | Bonds may involve secured or unsecured loans, while net debenture proceeds specifically relate to unsecured debentures. |
If you are considering financing a project through debentures, ensure you understand which costs qualify as eligible project costs. It may be beneficial to consult legal professionals or use legal templates from US Legal Forms to navigate the process effectively. If your situation is complex, seeking professional legal assistance is advisable.
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They are the funds obtained from debentures that are allocated for eligible project costs, excluding administrative expenses.