Growth capital
Funding a defined expansion — a new line, a new geography, a larger order book — where the return is reasonably forecastable.
Debt funding advisory
Capital without giving up ownership.
For businesses with the cash flows to service it, debt remains the least expensive way to fund growth — provided the structure matches the purpose and the case is prepared properly.
OwnershipRetained in full
CostContractual, not dilutive
ConstraintServiceability and security
What debt funding is
Borrowed capital, repaid on agreed terms — and nothing more.
Debt funding covers any arrangement where a business borrows a defined amount and repays it with interest over an agreed period. The lender does not take a share of the business, does not participate in future profits and has no claim on strategic decisions beyond what the loan agreement specifies.
That is its central advantage. A promoter who funds a ₹15 crore expansion with debt still owns the same percentage of the business afterwards. One who funds it with equity does not.
The trade-off is obligation. Interest and principal fall due whether or not the expansion performs as expected, and lenders generally require security, covenants and often personal guarantees. Debt rewards predictability and punishes volatility.
“Debt is the right instrument when you are confident about cash flows and unwilling to share ownership. When either of those is uncertain, it is worth pausing.”
Structuring principleTo be clear: Sourcing India does not lend. We advise on structuring and preparation, and coordinate with lenders. Sanction decisions rest entirely with them.
Where debt is used
Six requirements debt is commonly structured around.
Each has a different natural tenor, security profile and lender appetite. Matching the instrument to the purpose is most of the work.
Working capital
Bridging the gap between paying suppliers and being paid by customers. Usually revolving rather than term, and sized to the cash conversion cycle.
Equipment & project funding
Asset-backed facilities where the funded asset itself forms much of the security, typically over a longer tenor.
Corporate debt
Larger, often multi-facility arrangements for established businesses with layered requirements across entities or divisions.
Structured finance
Arrangements shaped around specific cash flows, receivables or contracts rather than the general balance sheet.
Refinancing
Replacing existing facilities to improve tenor, pricing or covenant terms — often the most under-considered option on this list.
Who it tends to suit
Debt usually fits businesses that can answer yes to most of these.
None of these is an absolute requirement. Together they describe the profile lenders find straightforward to underwrite.
- Revenue is established and reasonably predictable rather than projected
- Cash flows can service repayment even in a materially worse year
- There are assets, receivables or contracts available as security
- Statutory filings, GST returns and banking conduct are clean
- The promoter wants to retain full ownership and control
- The requirement has a defined purpose and a defined end date
How Sourcing India assists
What we actually do on a debt mandate.
The unglamorous middle of this list is where most declined applications are lost.
01
Capital requirement analysis
Establishing what is genuinely needed, over what period, and what the business can comfortably service. This number frequently changes.
02
Funding structure
Term versus revolving, tenor, security, guarantees and covenant tolerance — settled before anyone is approached.
03
Financial preparation
Restating financials for an external reader, building defensible projections and reconciling statutory, tax and management accounts.
04
Lender positioning
Identifying which lenders are actually active in your sector, ticket size and risk profile, then presenting the case in the form they assess.
05
Documentation coordination
Assembling the information pack and managing the requests that follow, so momentum is not lost to administration.
06
Discussion support
Preparing you for lender questions, comparing offers on a like-for-like basis and coordinating through to sanction.
Key considerations
Six things worth settling before you borrow.
01
The all-in cost, not the headline rate
Processing fees, insurance, prepayment penalties and the cost of maintaining security can move the effective cost materially.
02
Covenant headroom
A covenant you meet comfortably today may bind in a slower year. Model the downside before signing, not after.
03
Security you are giving
Once assets are charged, refinancing options narrow. Understand what is being encumbered and what remains free.
04
Personal guarantees
Common in the Indian mid-market and frequently underestimated. Know exactly what is being guaranteed and for how long.
05
Tenor against the asset
Short-tenor debt funding a long-payback asset creates refinancing risk. Matching them is basic, and often skipped.
06
What happens if you outperform
Prepayment terms matter. Success should not be expensive.
Debt is a contractual obligation and carries genuine risk, including to any assets or guarantees provided as security. Nothing here is a recommendation to borrow, and no funding outcome is assured — every sanction decision belongs to the lender.
Questions
Questions we are asked about this
Lenders generally look at serviceability rather than a single ratio — how comfortably existing and proposed obligations are covered by operating cash flow, alongside the security available and your conduct on existing facilities. Two businesses with identical turnover can have very different capacity.
A realistic range usually becomes clear once three years of financials and the current debt position have been reviewed.
In direct cost, almost always. Interest is a defined percentage, whereas equity gives away a share of all future value. But debt carries obligation regardless of performance, and equity does not. The correct comparison is not rate against dilution — it is certainty of obligation against certainty of return.
Frequently, yes. What matters is total serviceability, the security position, and whether existing lenders' terms permit additional borrowing. In some cases consolidating or refinancing existing facilities produces a better outcome than adding another one on top.
No, and any adviser who does should be treated with caution. We prepare and position the case as strongly as the underlying business supports. The credit decision belongs entirely to the lender.
Related
Explore related solutions
Most funding conversations touch more than one route. These are the ones most often considered alongside this page.
Considering debt for the next phase?
Send us the requirement and the current debt position. We will tell you what looks fundable, what needs work first, and whether debt is even the right instrument.