Debt funding
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Introduction of the service

I am meeting my Bankers today, hope they help me with raising Working Capital Finance for my business. If not, how will I raise funds to run my business?  

I’m paralyzed..i don’t know what to do..i am reading everything on Google but actually not getting anywhere with the funding… 

Getting funds for your new business is not only seems to be tough, but impossible. You might have come across several such entrepreneurs who have not been able to fund their business – lack of funding knowledge.

Not many know which funding option to choose, plus there are many other things to consider when you are approaching an investor. Debt funding services take care of the entire finance process, from matching you with one of our reputable investors to processing your work.

Features of Debt Funding

  • Short Term 
  • Tax Advantage
  • Low interest rates
  • No Future Lender
  • Equity or Capital is not diluted
  • Simple Loan Repayment

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Debt financing means borrowing money and not giving up ownership. Debt financing often comes with strict conditions or covenants in addition to having to pay interest and principal at specified dates. Failure to meet the debt requirements will result in severe consequences.

Debt funding is advantageous for growing companies. Not only is it cheaper than raising equity, it also helps you preserve your ownership stake. And when you’re at the stage when you need to grow fast, it makes sense to preserve your equity for as long as possible.

  • Venture capitalists, Angel investors; those who fund on a smaller scale, are often looking to invest a mindful of capital, and possibly a 30-50% stake in the company, especially if it is in the very beginning stages.
  • If your company is a small business serving a local market and does not need large-scale funding, debt financing is probably your best, and perhaps only, option.
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  • Utilization of Resources – When a business uses debt to finance its operation, they got no option than to fully utilize their resources because they will have to pay back the debt and interest to their creditor.
  • Short Term Needs – Debt finance can easily be secured on a short term bases. This make it very advantageous to the small business as finance of this type can easily be secured for short term business needs.
  • Tax Advantage – Debt financing also offers tax advantage to business as interest is deductible for income tax purposes.
  • No Future Lender Claims – Lenders has no direct claim on future earnings
  • Not Dilutive – Debt does not dilute the ownership of your small business.
  • Simple Loan Repayment – Lenders are only entitled to loan repayment and interest on loan.
  • Future Impact Forecasting – Interest and principal repayment are based on fixed percentage and can be forecast.
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Are you looking for debt funding? Beyond loans and lines of credit from the banks, financial institutions there are other sources of debt financing exist - These include:

  • Leasing companies
  • Non Banking Financial Companies
  • Venture debt funds and factoring/invoicing companies
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Messy accounting and record-keeping can ruin your chances of getting financed by raising questions in their minds as to how well you know your business, your competence in financial management, and your diligence with documentation.

  • Does your balance sheet balance?
  • Tip: Know your numbers and key metrics and be able to answer basic questions about them.

  • Is your legal house is in order?
  • Tip: Make sure your business is in good standing (bank lenders will run checks to make sure you’ve paid your business taxes and franchise fees).

  • Do you have a business plan with at least two years of financial projections?
  • Tip: Get professional help if you lack the skills and/or time to devote to this.

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Technically you can raise debt funds from multiple financial institutions. Generally the primary security is taken as a charge with the primary financial institution and a secondary charge or pari passu charge is accepted by the co-lender.

The financial institutions lending would calculate the loan exposure as a whole rather than separately. Hence it is important to understand this situation.

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