How to Position Your Company for Debt Finance

No matter how big or small is your business; you may feel the need of fund at any point of time. Business owners often require a fund to get rid of financial crisis due to global economic slowdown or to add new products or services to increase revenue. Some even face unfortunate lawsuits, for which they need funding as well.

The government or private banks will definitely be the first preference for most of the business owners, but what if you have already been credited with the huge amount of money and they have simply rejected your application for any further financial assistance. However, a debt finance agency can help you in such circumstances. Here we will talk about how you can position your business to avail financial assistance from debt financing or lawsuit funding firms.

What is Debt and Lawsuit Financing?

In debt financing, lenders provide cash to the borrower at a fixed rate of interest and with an assured maturity date. In such cases, the credited amount should be paid back by the end of the maturity period. In case of lawsuit funding, the lawsuit funding companies assist you with a cash advance to meet your business legal expenses.

Every debt financing or lawsuit company has its own plans, rates, terms and conditions and it will be the best idea if a fund seeking company tries to find a lender based on its requirement.

Learn about the Source of Financing

If you are the owner of a small business, then you can avail the fund from a number of different sources. You should know that private sources of financing are banks, consumer finance companies, credit unions, trade credit, commercial finance companies, insurance companies, leasing companies, factor companies and friends and relatives. In order to support small-scale enterprises, state and federal government offer several loan programs of debt financing.

Advantage of Debt Financing

No matter how big or small is the business; debt financing agencies will always be there to provide financial support. Ranging from business expansion or product development to repaying other creditors, the multi-dimensional advantages of debt financing have encouraged modern business owners to realize their dream even in this highly competitive market. Here are some notable advantages you can avail through debt financing.

  • Scope for business expansion
  • High profit
  • Revival of Sick Units
  • Tax advantage
  • Saving from insolvency

Look Out for a Sound Debt Policy

If you are the owner of a business, then your main responsibility should be to maintain a balance of your company’s financial requirements with its ability to obtain fund from other sources. It will be your job to sustain the continuity in the fund-flow so that no essential policy fails due the inadequate corporate purchasing power.

Managing emergency fund even in turbulent capital markets or when the company is going through an unfavorable phase should be one of your key responsibilities. However, traditional fund suppliers like state-run banks can be your first preference when you are in need of emergency funds, but you should know that traditional resources would take time to complete the procedure of approval and fund transfer. In addition, traditional suppliers will verify your credit history to check whether you have taken any kind of loan from other financial institutions or not.

However, in comparison, private debt financing agencies will provide you the required fund within a short period.

Debt financing means availing fund from lenders, which is to be repaid with agreed installment and with a specific rate of interest. Today, a big chunk of businesses are running their organizations mostly by debt financing.

Author Bio-Mathew Wilson is a renowned economist, who is running a consultancy where he helps people by offering legal advice about debt financing. He also guides people with the best lawsuit funding companies in case of need.