Debt capital market finance versus loan finance

Published by a ��Ӱ�� Banking & Finance expert

Practice notes

Debt capital market finance versus loan finance

Published by a ��Ӱ�� Banking & Finance expert

Practice notes

Methods of raising finance

When a corporate entity needs to raise finance, it must first decide whether to carry this out by means of raising debt from creditors or by issuing shares in the equity market. This choice will be driven by a number of factors including the wishes and requirements of potential creditors/investors and the nature of the entity wishing to raise the finance.

For information on the differences between raising money by raising debt from creditors and raising money by issuing shares, see Practice Note: Debt and equity securities compared.

Loans versus debt securities

Loans come in a wide variety of forms. A simple and very common type of loan is an overdraft. Other common types of loan in commercial financing are term loans and revolving credit facilities.

Loans can be provided by one lender (bilateral) or multiple lenders (syndicated or club deals) and they can be secured or unsecured. They can be used for long-term or short-term financing. For more information, see Lexis®PSL sub-topic: Types of lending.

Debt securities

Jurisdiction(s):

United Kingdom

Key definition:

Shares definition

What does Shares mean?

The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.

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