Term Loans vs NCDs vs Venture Debt: Which Fits Your Business?

Term loan

A term loan is generally structured around a principal amount, interest and a repayment schedule. It may be secured or unsecured and can include covenants, fees, conditions and prepayment terms. The borrowing business should test repayment capacity against cash flows, not just a base-case forecast.

Non-convertible debenture

An NCD is a debt security that does not convert into equity under its terms. Issuance may involve company-law and securities requirements that depend on whether it is privately placed or offered publicly, the issuer and the investor group. The document set, trustee or security arrangements, disclosures and continuing obligations must be checked for the specific issue.

Venture debt

“Venture debt” describes a financing approach often discussed alongside venture-backed companies; the actual instrument and economics vary. It can include repayment obligations and may be paired with equity-linked features or other conditions. Do not assume that a venture-debt offer has the same structure, protections or suitability as a standard loan.

Compare on a like-for-like basis

Record total cash cost, repayment dates, security, guarantees, covenants, default triggers, conditions, flexibility and any dilution or equity-linked rights. Stress-test the business if growth is delayed. Consider currency and refinancing risk where relevant. Ask counsel to review the actual instrument and financial advisers to test the company-specific impact.

There is no universal “best” option. The business’s use of funds, cash generation, ownership goals and available terms determine the trade-off. Review NorthBridge’s live capital page and services overview; use contact for a discussion.