Debt is one of the cheapest source of finance available for the business owners. The dynamics of the debt requirements of business are transforming over a period of time.
We already have some traditional ways of raising finances like raising term loans for fixed capital, cash credit and overdraft for working capital requirements and Letter of credit and bank guarantee in the form of non fund based limit.
There are new ways of meeting the debt requirements like post shipment limits, foreign currency term loans, invoice financing, equipment financing, merchant cash advances, structured cash flow financing, real estate financing, transport financing, school financing, first loan default guarantee and other models.
With the emergence of new age private banks, NBFCs , international banks and fin-techs coming into the picture the facilities of debt finance is now available to those who were previously not eligible.
It us very important to understand the business model and understand how that debt can be financed at different stages of the business cycle.