Other forms of finance provided in addition to venture capitalist equity include:
- Clearing banks - principally provide overdrafts and short to medium-term loans at fixed or,
more usually, variable rates of interest.
- Merchant banks - organise the provision of medium to longer-term loans, usually for larger
amounts than clearing banks. Later they can play an important role in the process of "going
public" by advising on the terms and price of public issues and by arranging underwriting when
- Finance houses - provide various forms of installment credit, ranging from hire purchase to
leasing, often asset based and usually for a fixed term and at fixed interest rates.
Factoring companies - provide finance by buying trade debts at a discount, either on a recourse
basis (you retain the credit risk on the debts) or on a non-recourse basis (the factoring company
takes over the credit risk).
Government and European Commission sources - provide financial aid to UK companies,
ranging from project grants (related to jobs created and safeguarded) to enterprise loans in
Mezzanine firms - provide loan finance that is halfway between equity and secured debt. These
facilities require either a second charge on the company's assets or are unsecured. Because the
risk is consequently higher than senior debt, the interest charged by the mezzanine debt provider
will be higher than that from the principal lenders and sometimes a modest equity