Debt Finance
The term debt finance is an umbrella term which includes secured and unsecured business loans as well overdrafts and credit cards. If you run an established large business, you will have many more of these financing options available to you than if you wish to start up a Small or Medium sized Enterprise (SME).
If you run a large business, you may already have reliable cash flow and perhaps property which you can use as security for a high-value loan. If however you are a sole trader or run a small business, you might be required to use your personal wealth, for example your house, as collateral for a loan. This is naturally a frightening prospect, since many small businesses fail after a few years. For this reason many businesses seek funding for which they do not have to make immediate payments: equity financing.
Alternatives to business loans include short-term overdrafts and 'invoice financing'. Debt financing is an advisable source of business loans for organisations whose management wish to retain ownership and control, or for businesses who are seeking a mixture of financing options. For details see:
