Abstract Short- and long-term capital is necessary for organizations to survive in today's economy. Now more than ever, organizations need these diverse sources to diversify, expand or maintain more efficient processes, thus staying ahead of the pack. Today's businesses and consumers demand speed and quality of products. Short and Long Term Capital There are many different sources of short and long term capital in the market. Here are some examples: Commercial Banks Smaller companies are much more likely to gain an attentive audience from a commercial loan officer after the startup phase is complete. When determining whether to extend debt financing – essentially, make a loan – bankers first look at your overall credit rating, collateral and repayment capacity. Bankers also carefully look at the nature of your business, your management team, competition, industry trends and how you plan to use the proceeds. A well-drafted loan proposal and business plan will go a long way in demonstrating your company's creditworthiness to the potential lender. Commercial Finance Companies Many businesses that receive a rejection from a bank turn to a commercial finance company. These companies usually charge significantly higher rates than institutional lenders, but may provide lower rates if you sign up for the other services they offer for a fee, such as payroll and accounts receivable management. Due to fewer federal and state regulations, commercial finance companies generally have more flexible lending policies and a greater appetite for risk than traditional commercial banks. However, commercial finance companies are just as likely to reduce risk, with higher interest rates and stricter collateral requirements for lending to undeveloped companies. Leasing Companies If you need money to purchase goods for your business, leasing offers an alternative to traditional debt financing. Instead of borrowing money to purchase equipment, you instead rent resources. Leasing typically takes one of two forms: Operating leases typically provide both the asset that you would borrow money to purchase and a service contract for a period of time, which is usually significantly less than effective useful life of the asset. This means lower monthly payments. If negotiated properly, your operating lease will contain a clause that gives you the right to cancel the lease with little or no penalty. The cancellation clause gives you flexibility in the event that sales decline or the rental equipment becomes obsolete. Capital leases differ from operating leases in that they usually do not include any maintenance services and involve the use of the equipment for the entire useful life of the asset.