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Are the bank's lending? Depends on who you ask: if it's the banks then the answer is ‘Yes'. If it's the many small and medium-sized businesses then the response is often a resounding ‘No'. The recent trend does however seem to suggest that banks are beginning to loosen the purse strings. With a gradual, albeit slow, apparent movement by the banks to start lending, we consider the attractiveness of raising debt finance by small/medium sized businesses.
Debt-finance is essentially money which is borrowed to run a business either on a short-term or long-term basis, typically from banks and more often than not backed by some form of security. The principal amount is repaid together with an agreed level of interest. Although the term "debt-finance" can sound negative, many successful companies have some level of debt-finance on their balance sheet.
Advantages of Debt Finance
Disadvantages of Debt Finance
Debt-finance may be difficult to obtain for many businesses given the recent economic climate and the change in the attitude and requirements of the banks. Nevertheless, it is an avenue well worth exploring and can provide your business with an effective source of finance to develop and expand your business without the need to bring in outside investors and give up a share of your company.
If you require legal advice on debt or equity finance, please contact Ashan Arif at email@example.com or on 01189585321.
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