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• Commercial Debt

Commercial Debt

Debt is not a dirty word, notwithstanding 2008’s financial crises.

Commercial debt finances the purchase of equipment and tools, product development efforts, and business expansion generally.  Unfortunately, it is typically only available to companies with an established revenue base, but do check with your bank. Obtaining commercial debt financing is worth it! 

For many years in Silicon Valley, bank loans have been less visible than venture capital. But in real terms, at least in the absence of an IPO exit, they tend to cost common stockholders less than VC equity. This is because the return paid to VCs on the sale of the company, the key preference of the VCs’ preferred stock, adds up to significantly more than the company would pay in interest to a bank over the life of a commercial loan.

Types of COmmercial Financing

Various different financing transactions fit under the general rubric of Commercial Debt. For example:

1. Equipment lease financing, enabling you to purchase that much-needed equipment with a much lower cash outlay than its price.
2. Factoring your receivables, on a consistent basis or once in a while when your cash flow is down.
3. Export letters of credit, so that you can ship products to customers abroad with greater assurance that they will be paid for.

Related Information

• Start-up financings
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• Help for non-US business (from abroad)