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Different Loans for Startups
By siliconindia
Debt Capital
Debt capital means loans that are given by financial institutions or individuals and you need to pay it off including a certain percentage of interest which is the capital gain for the investment made by them. Such capital is provided based on the assets, i.e., the ability of the startup to repay and generally must be supported by hard assets within the business or the personal assets of his.
Opt for such loans only if you have a very sound, operational-based business plan developed, as these institutions and individuals are very risk-averse and conservative. There are several sources of debt financing, such as banks which is the most common form of loan and sometimes the only life savior; vendor financing where in you can get financing for equipment purchases from vendors and is sometimes called as lease, but you have to pay it off with interest rates; credit cards, the use of which can be dangerous due to the too-much of capital that you can get but end up with huge interest payments, fees and penalties for slow or non-payment.
