In the past few weeks, we've been exploring various sources of start-up funding. Just to recap, we've tackled equity and grant funding.
Today I will introduce debt capital. With debt capital, a business borrows funds from a lender and undertakes to repay the principal amount together with interest periodically. One distinct feature of debt is that the funds must be repaid. Unlike equity financing, the lender does not get any stake in the company. His interest in the commercial transaction is the interest he will make.
