How to raise capital for business by “Hybrid Loans” or “Hybrid Finance” or “Hybrid Securities”. This is Equity Finance & Debt Finance combination.

Another great way of Raising Business Capital is by way of “Hybrid Loans” also called as Hybrid Finance and as Hybrid Securities. In this video tutorial, we discuss how to raise capital for business by this popular method which more & more companies are availing these days.

These hybrid loans are becoming very popular among growing companies as this is a Combination of both Equity Finance & Debt Finance. The purpose of availing hybrid finance is to combine the advantages of both equity finance & debt finance. The major advantage of hybrid security is its security. The borrowings will be at low interest rate which also helps minimize monthly payments and reduce the overall cost of borrowing.

Since  equities  and  debt  instruments  are  totally different,  the  purpose  of  hybrid  financing  is  to  combine  the advantages of both these investment instruments and give a better solution to the investors

The most common form of a hybrid instrument is the convertible bond.  This is basically a debt instrument which can be converted to a company’s stock at a given time.   One disadvantage of a convertible bond is its low yield. They often yield a lower rate of interest.

The major advantage with Hybrid security is its security. There is a great chance of profiting if there is increase in stock prices. There will be a loss only when the company defaults on its debt. Hybrid   securities   cannot   be   valued   accurately   &   hence sometimes there  is  a  good  chance  of  misrepresentation  in  the markets.

Many companies turn to Hybrid finance to fund their business venture. The concept of Hybrid Financing is becoming popular since  it  contains  the  advantages  of  both  the  equities  and  debt instruments.    Since  equity finance and  debt finance instruments  are  totally different & unique in their own ways,  the  purpose  of  hybrid  financing  is  to  combine  the advantages of both these investment instruments and give a better solution to the investors