The Golden Rule Of Funding

A while back I found an article that I thought was very interesting. It’s called The Golden Rule of Funding.

It highlights how when you borrow money for your business you should match the life of the loan to the asset. This seems like a pretty obvious concept however it’s not uncommon for a business owner to jump the gun and use any type of finance available to them such as an overdraft.  This can leave them short on working capital to pay for wages, rent etc .

By matching the life of the loan to the life of the asset, the asset can pay for itself out of the earnings it generates. Like with Debtor Finance you are only borrowing against your invoices, as you grow your funding grows with you. It’s Finance where the loan is only good till the invoice is paid.

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