How to Get Debt Financing for Your Business or Project
Debt financing is an alternative source of capital for small growing companies and it is critical to start the process of looking for debt funding early and not wait until you are in a real cash-flow crunch, because you will lose your negotiating leverage and weaken your company’s financial position, a major turn-off to most commercial lenders.
How debt financing works
The maximum debt capacity that a small growing business will ultimately be able to handle will usually involve balancing the costs and risks of defaulting on a loan against the owners’ and managers’ desire to maintain control.
If your business plan and cash-flow projections reveal that making loan payments will strain your company’s financial condition (or that you don’t have sufficient collateral), then you should explore equity alternatives.
It’s simply not worth driving your company into bankruptcy solely to maintain maximum ownership and control. You should also compare the level of debt financing you are planning to obtain against the typical ratios for businesses in your industry.
Once you’ve figured out your optimum debt-to-equity ratio, you can look into the sources of debt financing, and the business and legal issues involved in borrowing funds from a commercial lender.
Get Debt Financing for Your Business or Project
Now you can get up to 100% debt financing for your business or project worldwide. Ready, willing, and able to fund viable and underwritten projects and businesses.
Funding range: US$1 million minimum (No maximum)
A proper debt-to-equity ratio for your business will depend on a wide variety of factors, including:
- The impact that your obligation to make payments under the loan will have on the cash flow of your business,
- Your costs relating to obtaining the loan,
- Your need for flexibility in the capital structure so you can respond to changing economic or market conditions,
- Your access to alternative sources of financing,
- The nature and extent of your company’s assets (tangible or intangible) that are available as collateral,
- The level of dilution of ownership and control that your shareholders (and managers) are willing to tolerate,
- Certain tax considerations (interest payments are a deductible expense, but dividends are not).
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