Skip to main content

Debt financing



When a company has to pay for something they have two options, to pay with cash or to finance the purchase. To finance the purchase means that they will get the money from other businesses and sources in return for obligation.  Basically debt financing is when a company  gets a loan and promises to repay the loan over time with interest. Debt refers to the amount of money that has to be repaid and financing refers to providing funds to be used in a business.Companies can use the money to finance short-term needs as well as long term business expenditures. Debt may take a form of a loan or the sale of bonds. 

Another way to raise capital is through equity financing; the company raises money by selling ownership shares in a business. If you compare it with equity finance the good feature of debt financing is that you don't lose ownership of the company. Debt financing is a time-bound activity , where principal must be paid back in full by maturity date along with interest rate. The payments can be monthly, half yearly or some in some other period specified in the borrowing agreement. Loans can be secured with assets of the company.

The biggest advantages of debt financing is that you maintain the ownership in the company. You retain the right to run your business however you like and circumvent the shareholders pressure. Your only obligation is to make the payments on time. With company ownership comes control over management decision. In case of equity financing you can find yourself being less agile in making decisions, because you have to often find approval. Huge attraction of debt financing is the fact that interest payments are tax deductible because they are classified as business expenses. Not all ways of raising funds are possible for smaller businesses. With the debt financing even the smallest business can afford some form of debt financing.

Emry Capital offers Line of credit and Invoice factoring as a means of debt financing. We offer you credit lines from $5,000 to $5 million. Our rates are low as 4,8% and approvals are fast as 20 minutes for Line of credit and fast as 24 hrs for Invoice factoring. Apply online now!

Line of credit enables you to pay only what you use of funds that are available on your demand. With access to revolving line you can draw as little or as much you want from your available credit. We support your business growth by getting you the right line of credit for your business size at any stage.

Invoice factoring provides you access to more capital than ever with full flexibility. Your credit line will grow together with you sales. There are no recurring payments when your customer pays by the invoice date. You will know exactly what you are paying with our straightforward fees. It's up to you to decide what you want and need to fund; without long term contract.

Labels

Labels:
Location: West Palm Beach, FL, USA

Comments

Post a Comment

Popular posts from this blog

How to use accounts receivables to finance your business?

Inventory financing is a type of asset-based financing where working capital is provided to a company through accounts receivable, inventory, machinery, equipment as a collateral. Accounts receivable financing or factoring use outstanding accounts receivable as a means of financing. Both methods are usually used as a quick access to a working capital, money you use for daily operations. This can be alternative to a bank loan especially if you own a start-up company. There are other financing companies that can offer you factoring services and really help you manage a positive cash flow. Pledging accounts receivable means that you use your accounts receivable that are not paid yet as a collateral to obtain a loan but you are still responsible for collecting a loan as a business owner. Lender picks accounts receivable they want to accept as a collateral. Accounts receivable that are overdue or ones in which you extended the credit for too long are very likely to be refused by the...
Post a Comment
Read more

Credit report and credit score - what you need to know

Credit score is generated by an algorthm using your credit report. Its main purpose is to help lenders to decide whther to approve loan application and determine the terms of that loan. In other words they are determining risk, how likely is that you will repay your loan. Credit report and credit score is not the same but they are connected. There are three major credit report agencies also known as credit bureaus Equifax, Experian and TransUnion that collect information about you and sell it to other companies. Credit reports show what bureaus knowa bout you. They gather information from many sources. Part of their information they get from lenders. Lenders report loans you took to one or all theree agencies. This also means that your credit report might be different in each agency depending where lender reported it. Some lenders don't do reporting so it is important to work with ones that do if you are trying to build your credit. Other part of information comes from publ...
Post a Comment
Read more

Difference between cash flow and profit

You might think that cash flow and profit are the same terms that can be used interchangeably. They are indeed the key aspects of a business but they represent two different financial parameters. Business can have a positive cash flow but no profit or it can have large profit but negative cash flow. How is this possible? Cash flow is exactly what the name says, the way cash flow trough business,its inflow and outflow. Companies use it to meet current and near-term obligations. If company has a negative cash flow in the worst case scenario it can lead it bankruptcy. Positive cash flow means that business can always pay suppliers, meet payroll, purchase inventory, pay taxes and other expenses. Conserving a cash flow is one of the most important features of a good business. It takes time and planning, sometimes even professional assistance. Profit, also called net income is a difference between gross income and expenses. When you subtract your expenditures from your s...
Post a Comment
Read more