Please describe the various sources of debt capital and the

Please describe the various sources of debt capital and the advantages and disadvantages of each: banks, asset based lenders, vendors (trade credit), equipment suppliers, commercial finance companies, savings-and-loan associations, stockbrokers, credit unions, bonds, private placements, Small Business Investment Companies (SBICs) and Small Business Lending Companies (SBLCs).

Solution

Sources of debt capital are as follows:

Bank

Banks offers finance for both short and long-term financial solutions.

Advantages:

Disadvantages:

Equipments Suppliers

Finance needed to purchase goods such as furniture, technology or equipment, most of the stores offer store credit through Equipments Suppliers.

Disadvantages:

Vendor

Many vendor offers trade credit which allows businesses to delay payment options for goods. Advantages:

Disadvantages:

Commercial finance companies

This private investor is wealthy individuals, often entrepreneurs themselves, who invest in business start-ups in exchange for equity stakes in the companies.

Advantages:

Disadvantages:

Stock brokerage

Advantages:

Disadvantages:

Small Business Investment Companies are privately owned companies licensed and regulated by the SBA that qualify for SBA loans to be invested in or loaned to small businesses.

Advantages:

Disadvantages: