Debt facility types: which structure to ask for
Term loans, working capital lines, invoice discounting, trade finance, asset finance and overdrafts, and how each one is repaid.
Term loan
A fixed amount repaid in instalments over a set period, commonly three to seven years. Suited to a one-off investment with a long payback: a building, a fit-out, a major machine.
Working capital facility
A revolving limit you draw on and repay as trading cycles turn. It funds the gap between paying suppliers and being paid by customers. Lenders size it against your receivables, inventory and seasonality rather than your fixed assets.
Asset or equipment finance
The asset itself is the security, so the approval hinges on the equipment's value and useful life. Deposits of ten to thirty percent are common, and the term normally matches how long the asset will earn.
Invoice discounting and factoring
You advance cash against unpaid invoices. The provider is really underwriting your customers, so a concentrated book of strong regional buyers can be an advantage. Keep your receivables ageing clean and current.
Trade finance
Letters of credit, import loans and similar instruments that bridge the period between ordering goods and selling them. Widely used by Caribbean importers and exporters where shipping times stretch the cash cycle.
Overdraft
A short-term buffer on your operating account. Cheap to hold and expensive to live in — providers read a permanently drawn overdraft as a sign that a term facility is really needed.
Related guides
Types of capital explained
Debt, equity, project finance, hybrid instruments and grants — what each one costs you, who provides it in the Caribbean, and when it fits.
Debt service coverage and the ratios lenders run
DSCR, gearing, current ratio and interest cover — how each is calculated and the levels that usually pass.
Collateral and security in the Caribbean
What providers accept as security, how it is valued, and the alternatives when you have little to pledge.