Learn About The Advantages Of Debt Financing For Your Business

Finance is the critical need for sustenance of any type of business. Read on to know advantages of debt financing for your business.

3 Nov,2022 17:36 IST 39 Views
Learn About The Advantages Of Debt Financing For Your Business

Companies need consistent funds to start and run their business smoothly. However, when business owners opt for external funding, they may have to sell a part of their company to investors. Debt financing poses an ideal option for business owners who do not want to sell a part of their business and still raise immediate capital.

Advantages Of Debt Financing For Your Business

Debt financing ensures the business sustains and can effectively navigate the dynamic market and competition. Here is how debt financing through loans can benefit your business:


Business owners generally raise funds through Venture Capital (VC) or debt financing. However, raising funds through VC funding requires business owners to sell a part of their business. Raising capital through debt financing does not require business owners to sell a stake in their company, allowing them to retain ownership.

Nominal Interest Rates

Loans included in debt financing have attractive and affordable interest rates. They do not have unnecessary or hidden costs. These interest rates on a business loan ensure that the startup owners can pay the amount without any future financial burden or repayment liabilities.

Tax Deductions

Repayments for loans included in debt financing fall under business expenses. They are tax-deductible and subtracted from the business owner's total taxable income. It reduces the net tax obligation of the business owner and results in paying fewer taxes.

Constant Cash Flow

Debt financing allows business owners to raise immediate funds through various loan products. As businesses have numerous expenses such as employee salaries, rent etc., debt financing can provide adequate capital to pay for such business factors. It also ensures that they have a positive cash flow and are financially strong.

Easily Accessible

One of the best factors of debt financing is its flexibility to raise capital for businesses of any size. Generally, alternate methods of funding may not be accessible to small businesses. In such cases, debt financing ensures they can take immediate loans and invest healthily in their company.

Therefore, it is evident that budding entrepreneurs and businesses looking to expand can lean toward debt financing to succeed. Various banks and NBFCs offer debt financing products to raise instant funds through a quick disbursal process.


Q:1: What is debt financing?
Ans: Debt financing is raising capital through various loan products such as term loans, business loans, gold loans etc.

Q.2: What is the minimum turnover for a business to avail a business loan?
Ans: The minimum turnover for a business in the last three months should be Rs 90,000 to apply for a business loan.

Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

Most Read

Franking and Stamping: What’s the difference?
14 Aug,2017 03:45 IST
Like 3485 3485 Likes
Difference Between 24 Karat and 22 Karat Gold
8 Dec,2022 09:26 IST
Like 740 740 Likes
Personal Loan With Low CIBIL Score
21 Jun,2022 09:38 IST
Like 1174 1174 Likes
Why Gold Is Cheaper In Kerala?
14 Jan,2023 09:35 IST
Like 537 1802 Likes

Get in Touch