By Evan Vitale
In our next few blog posts, we’ll discuss different types of capital, including equity capital, private equity, venture capital, angel investors and investors.
But first, let’s talk about debt capital, which is the most common type of capital.
Debt capital is the capital that a business raises by taking out a loan. The loan is normally repaid at a future date, usually with interest.
Typically, debt capital is obtained from your regular bank or, if the loan is large, then it may come from an investment bank. Consider a debt capital loan just like taking out a loan for a home mortgage or for an automobile.
The big difference between debt capital and other types of capital is that the lender doesn’t become part owners of your business. However, some debt capital lenders expect to earn up to 10% interest (or more) off the loan.
Debt capital is very common among entrepreneurs, who the investor believes most likely will pay off the debt by an agreed-upon deadline.
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Evan Vitale is a multifaceted finance and accounting professional who provides Audit, Accounting, Tax, Due Diligence and Advisory services to Venture Capital Funds, Hedge Funds, Private Equity Funds, Family Offices, Small Business Investment Companies (SBICs), Funds of Funds, Other Investment Groups and their management companies.
Today’s market has made it extremely difficult to predict what the next day will bring. For Funds and Other Investment Vehicles, the expectations remain to balance the different opportunities with a continued focus on value creation in existing portfolios. The key to any successful organization is building and maintaining the trust of your investors. Evan has the expertise to help you shine in your investor’s eyes and stand apart from the competition.
View presentations by Evan Vitale at http://www.slideshare.net/evanvitale.