| Debt financing has never been a hit with small business | | | | offered you this facility before so take it. With the |
| owners. Many small business owners take the view of | | | | credit line being reviewed on a yearly basis take the |
| never ever using it unless they have no other choices. I | | | | maximum quantum offered. After all, there's no |
| can understand why it is being avoided as if it is a | | | | certainty that you will be getting the same or better |
| disease. If incorrectly utilized, it can become a financial | | | | deal in years to come. |
| burden with the high interest rate that is pegged to | | | | On the other hand if your company is planning to |
| unsecured credit facilities. However do not discount | | | | expand, go with the unsecured business installment |
| debt financing, as it can be a good way to raise | | | | loan. Now you get to maximize your business potential |
| much-needed funds for your business. | | | | without needing to fear that your sources of livelihood |
| Today, there are two types of unsecured credit | | | | being taken away from you. Most banks do not |
| facilities open to small business owner. Whether it is to | | | | restrict the usage of the funds thus the flexibility is a |
| be a business overdraft or a business installment loan, | | | | big bonus to any small business owner. The funds can |
| the choice would ultimately depend on the needs of | | | | be used for working capital, purchase of machinery |
| your company and how the capital will be utilized. | | | | and materials, payroll financing etc. The option to pay |
| If your company needs a safety net for rainy days, | | | | back between 12 to 60 months allows you time to |
| your best bet would be an unsecured bank overdraft | | | | reap the returns on your investment. |
| facility. It is an excellent way to minimize your interest | | | | Every bank has slightly different policies on unsecured |
| expense especially if the funds are used for a short | | | | credit facilities for small businesses. I strongly |
| period. This is due to the interest being calculated on a | | | | encourage you to shop around for more information |
| daily basis. However do take note that the interest | | | | before deciding whether debt financing is suitable for |
| rate is usually pegged to the board rate which | | | | your company and if so, which bank to acquire this |
| fluctuates with time. Some banks even pay you | | | | source of funds from. To find out more about how |
| preferential interest rates if your account has credit | | | | debt financing can work for your business, speak to |
| balances in it. Your current banker probably has | | | | your banker today. |