Depreciation and amortization can be entered into cost expenses, thereby reducing the income tax payable. Because less income tax is paid, the cash outflow is reduced, which is commonly referred to as depreciation tax deduction. Hence reducing cash outflow. The cash saved. can be used to repay the loan. Simply put: Profit + depreciation + amortization is equivalent to the current cash balance.

Depreciation of fixed assets. In view of the fact that the project has not yet faced the problem of updating fixed assets in the early stage of production, the depreciation fund, which is in the nature of fixed asset replacement reserve, will be temporarily idle after being withdrawn.

Therefore, in order to effectively utilize all possible sources of funds to shorten the loan repayment period and strengthen the solvency of the project, part of the newly added depreciation fund can be used as a source of loan repayment for the intangible asset amortization fee It is included in the total cost of the project according to the current financial system. However, after the project amortizes the amortization fee, this fund has no specific use regulations and has a "sediment" nature, so it can be used to repay the loan.

Extended information:

The loan principal refers to the amount of funds borrowed by the borrower from the lender. The loan principal does not include any fees required in the borrowing process (such as insurance, appraisal fees, etc.).

These fees are part of the cost of the loan, along with the interest you pay. There are two ways to repay the loan principal, one-time repayment and installment repayment. A one-time repayment is a one-time repayment of principal and interest to the lender at the end of the loan cycle. An amortization will have multiple payments, with the repayment of principal and interest spread over each payment.

Small loan with equal principal and low interest rate: For example: loan of 120,000 yuan, annual interest rate 4.86%, repayment period 10 years, equal principal and interest: repayment after 10 years is 151,750.84 yuan, total interest 31,750.84 yuan, equal principal: repayment after 10 years is 149,403.00 yuan, total interest is 29,403.00 yuan.