See for general explanation.

Businesses acquire new fixed assets to maintain and/or to grow the business. Purchase price for these new fixed assets (also called capital expenditures) can often be financed with new borrowings (Leasing a new piece of machinery is a form of financing). Typically the business puts up a % of the purchase price of the new machinery from the internal cash flow and borrows the rest using the new fixed assets as collateral. 

Banks typically finance new fixed assets based on the purchase price of those assets. The loan advance rate, the interest cost, and the amortization period depend on many factors including the type of industry, the customers, the composition of the fixed assets, overall capacity utilization in the industry, portability of the fixed assets, custom vs. non-custom design, general economy, etc. 

This financing is often not available to small businesses. 

• Enter % Advance Rate on the amount of capital expenditure entered in , the % interest cost on this financing, and the loan amortization period. Do not type the % symbol. % Advance Rate can be more than 100%.
• BVX calculates the amount of capital expenditure loan every year by multiplying % Advance Rate with the capital expenditure entered in .
• BVX pays accrued interest every year and amortizes the capital expenditure loan in uniform annual principal payments over the term of the loan. (Example: Assume Note = 1000, interest = 10% and Years = 5.  Year 1 debt service will be 300, consisting of 100 for interest and 200 for principal.  At the end of Year 1 outstanding debt will be 800.  Year 2 debt service will be 280, consisting of 80 for interest and 200 for principal).  An option for mortgage-type constant payment of combined principal and interest is not available for this loan.
• BVX always borrows against capital expenditures.
• BVX pre-pays capital expenditure loan per .