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North Country Alliance
Doing Business Guide.
Debt Financing
Debt is a loan whereby the lender expects repayment at some determinate time. The lender will ordinarily receive a return for the use of the funds in the form of interest. The interest rate reflects the lender's perceived risk. The higher the perceived risk, the higher is the rate. Your business plan must take into account the need to repay both principal and interest as agreed.
Debt financing is generally obtained from one of three sources. It can come from either a non-professional source such as a friend, relative, customer, or colleague, from a traditional lending institution such as a bank or commercial finance company, or from non-traditional lenders such as several of the North Country Association (NCA) member organizations or the NCA itself.