Long-term success in the market requires young companies in particular to constantly invest in their growth and expand their capacity. However, raising the capital to do this is a critical step for many startups – and a major challenge.
Building enough equity from retained earnings creates opportunity costs and takes a long time. During that time, the company will be unable to take advantage of the opportunities that arise. Yet, bringing in new external investors can limit the independence of the company’s management.
In many cases, using debt capital to fund growth can make sense. A growth loan for startups allows young companies with innovative business models to benefit from the greatest possible flexibility when utilizing their credit line. What's more, there are no long delays or shifts in ownership. This modular solution makes it possible to precisely tailor financing to the needs of each individual startup, meaning the capital required to cover running costs or major investments is available at all times.