This document discusses different financing options and questions to consider when seeking financing. It covers short and long term financing methods. For long term financing, domestic sources include debt through securities and loans, as well as equity through share capital and retained earnings. Lenders will consider the loan size relative to assets, management quality, and ability to liquidate assets. Specific long term debt options are then outlined, including debentures, term loans, and new instruments like zero-coupon bonds. Key factors for term loans are repaying from long-term cash flow and profitability projections.

1. DIFFERENT FINANCING OPTIONS

2. QUESTIONS TO ASK WHEN
LOOKING FOR FINANCING
WHAT AMOUNT DO I NEED?
 HOW DO I RAISE THE FUND? IS IT THROUGH
EQUITY OR DEBT?
 WHAT INFORMATION DO I NEED TO
PROVIDE THE LENDER/INVESTOR
 WHAT ARE THE REPAYMENT TERMS? DO I
HAVE TO PAY INTEREST? IF SO, WILL IT
VARY OVER TIME OR FIXED?
 HOW LONG WILL IT TAKE TO ACQUIRE THE
FUNDS?

3. QUESTIONS LENDERS WILL ASK
BEFORE TAKING DECISION
 INFORMATION
TO DERTERMINE HOW
THE BUSINESS IS MANAGED
 THE SIZE OF THE LOAN AS
COMPARED TO HOW MUCH YOU HAVE
 COMPANY’S ABILITY TO LIQUIDATE
ITS CURRENT ASSETS

4. FINANCING METHODS
 SHORT
TERM FINANCING
 LONG TERM FINANCING

5. Long Term Sources of Finance
 Domestic
 Foreign
Sources of Finance
Capital

6. Domestic Sources of Finance
 Debt
 Equity
– Share Capital
 Retained earnings
Share Capital :
Equity Share Capital
Preference Share Capital
Right Issue
Warrants

7. Debt Financing
 Debt
securities:
- Secured & unsecured debentures
- Convertible & non convertible debentures
- Zero interest fully convertible debentures
- Secured premium notes
- Deep discount bonds
 Loan from financial Institutions
 Public Deposits
 Term loans from banks

8. Debentures
Kinds Of Debentures







Bearer Debentures
Registered Debentures
Perpetual Or Irredeemable Debentures
Redeemable Debentures
Debentures issued as Collateral Security for a Loan
Naked Debentures
Secured Debentures

9.  Advantages
 Disadvantages
 Debenture
vs. Share Capital
 Methods of Redemption of Debentures
- Redemption of Debentures on a Fixed Date
- Redemption of Debentures by periodical
drawings
 Sinking Fund
 Debenture Redemption Reserve
 Convertible Debentures
- Valuation of Convertibles
- Institutional Conversion of Debentures / Loan
into equity

10. New Debt Instruments
 Zero
Interest Bond
 Equity warrants with NCDs
 Secured premium Notes
 Deep discount Bonds
 Zero Coupon Convertible Notes
 Debt for Equity swap
 Multi-option Secured Redeemable convertible
Debentures
 Callable Bond
 Option Tender Bonds
 Guaranteed Debentures

11. continued
 Subordinated
Debentures
 Floating Rate Bonds
 Junk Bonds
 Indexed Bonds
 Stepped-up Debentures
 Inflation – Adjusted Bonds
 Coupon Stripping
Asset Securitization

12. TERM LOANS
 Use
to finance your permanent working capital,
purchase of new equipment, construction of
buildings, business expansion, refinance existing
debt and business acquisitions.
 Term loans are repaid from the long-term
earnings of the business.
 Therefore, projected profitability and cash flow
from operations are two key factors lenders
consider when making term loans.
 Generally, interest rates on long- term loans are
higher than for short-term loans.