Debt Financing Definition

Debt financing is a method of financing your enterprise through borrowed cash. When the lender provides the loan, the debtor should pay the money within particular conditions in a stipulated period. Usually, the repayment involves the borrowed amount plus the accrued interest. You can get both secured and unsecured loans. Security is the collateral you give the creditor that you are willing and able to forfeit should you fail to pay. Collateral may involve fixed assets such as a plant, real estate, unpaid invoices, inventory, or the business itself. You can get a long term or short term debt financing, depending on your financial needs and goals. The long term loan is for acquiring fixed assets and maintaining them while the short term debt provides working capital for your business. Factors to Consider When Choosing Debt Financing There are several options for debt financing, and the best one depends on

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