Understanding Debt Management for Startups
Debt financing for startups offers growth capital, but requires careful management to ensure financial stability. Key considerations include debt capacity, interest rates, repayment terms, covenants, and security. Debt financing benefits include equity preservation, flexibility, and tax deductions. Risks include high interest costs, repayment burden, and default risk. Debt management strategies include restructuring, consolidation, equity conversion, and strategic partnerships. Best practices include regular monitoring, scenario planning, communication with lenders, and prioritising debt repayment.