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If a company gets into financial difficulties, it can quickly become insolvent and may have to be wound up…
A Guide to Understanding Debt Finance
Many small businesses seek to raise external funding at some stage, with debt finance being one of the most common sources for both start ups and existing firms.
There are, however, several different types of debt finance, and the ability of a business to raise external finance will depend on a number of factors such as its trading history, business type and security. Borrowing money often requires the owner or director of the business to provide personal guarantees, which can put their personal finances at risk.
This factsheet describes the types of debt finance available to businesses. It outlines the key issues that should be considered before taking on debt, and the associated risks.
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