ABSTRACT
This chapter provides various types of debt, examining how each type of debt works and for what it is best used. It discusses external debt as a source of funding for entrepreneurial ventures. Almost every business uses some form of debt in a variety of ways and from a variety of sources. The type of debt most commonly used by entrepreneurs is called trade credit, which is debt that arises from credit extended by suppliers and other vendors. An online transfer from the line of credit to the company checking account can provide funds from the line of credit, often on the same day that the request is made. While the entrepreneur may initially assume that a single source will provide funding, the reality is that most ventures are funded by an array of sources. The entrepreneur should then match fixed assets with the most appropriate source of funding, which may include either debt or equity investment.
