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An overview of the advantages of debt finance when considering your future plans.

  • One of the key advantages of debt finance is that the terms can be tailored to suit the precise needs of the business.
  • Repayments are straightforward, so can be simply planned for and the cash flow impact budgeted.
  • Generally, a loan costs less in interest than an overdraft over the same term.
  • Overdrafts and asset-based finance are often quicker to arrange than a loan.
  • Interest is only paid on the amount of money used in an overdraft and the facility is only used if required, so they provide flexibility. Similarly, with invoice finance, the equivalent of interest is only payable on the amount drawn down.
  • There is tax relief on interest payments.
  • Leasing gives a business access to the equipment they need without incurring the cash disadvantage of an outright purchase.
  • Leasing is a flexible form of finance for all types of assets because the loans are secured wholly or largely on the asset being financed.
  • Peer-to-peer (P2P) business lending can be more quickly arranged than a bank loan.
  • Businesses apply online, allowing applications at any time of day without the need to visit a branch.
  • P2P business loans may be available from a wide range of lenders.

Next steps

For more information about debt finance options use our interactive tool, or view other debt finance considerations.

Finance at every stage

Business financing is not a one-off decision, but an ongoing and evolving situation. No decision can be made in isolation to the businesses journey. Find out more about what options are suitable now and what might work at another stage.

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