Debt / term loan

Development banks and refinance institutions lend to businesses that a commercial lender would price harshly or decline: young manufacturers, first-generation entrepreneurs, units in sectors the state wants to grow. The money is repayable and interest accrues, but the rate, the tenure and the moratorium are all set to make the project survivable rather than to maximise return.

Because it is lending, the process is a bank's. Expect a full credit file — audited financials, projections, security, promoter background — and a credit committee rather than a portal. It is slower than a working-capital line and considerably cheaper than one.

Concessional debt suits planned capital expenditure with lead time. It is the wrong instrument for a cash squeeze that needed solving last month, and the wrong instrument for a business whose revenue cannot service a term loan at any rate.