| Commentary

2 Borrowing from the bank

| Commentary

2 Borrowing from the bank

In practice, the most common source of debt financing for newly-formed companies is a bank. Indeed, all the major UK clearing banks extensively advertise the availability of this facility. It is likely that a newly-formed company will need to obtain finance from this source. Banks offer at least two kinds of finance for businesses: loans and overdrafts. Loans are secured on the assets of the company and are required to be repaid according to a fixed schedule agreed in advance. Overdrafts may be secured or unsecured. An overdraft does not have to be repaid according

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