Equity and Debt Capital

Line of Credit

An agreement by a bank to lend up to a certain amount of money whenever the borrower needs it

Dept-to-Equity Ratio

Measures how much money a company can safely borrow over time

Equity Capital

Money invested in a business in return for a share in profits of the business

Debt Capital

Money loaned to a business with understanding that the money will be repaid with interest

Collateral

Property that the borrower forfeits if he or she defaults on the loan.

Accounts receivable financing

The balances owed by customers

Venture Capitalists

Individuals or companies that make a living investing in startup companies

Long-Term Loan

A loan payable over a period longer than a year

Inventory financing

When banks use the inventory held by a business as collateral for a loan

Secured Loans

loans backed by collateral that the bank can claim if the borrowers do not repay them

Unsecured Loans

loans that are not guaranteed with collateral