**2.5 Third stage of financing life cycle (mid-stage/mezzanine Stage)**

In the current stage, businesses reach their break-even levels and overcome the challenges in their path. Despite alternative funding, the new opportunity can be debt financing.

*Debt financing:* Debt financing refers to borrowing funds from creditors with the condition of repaying the borrowed funds including interest at a specified future time. The creditors benefit interests for the lending fund from the borrowers. Two types of debt financing are practiced including secured and unsecured. The secured debt has collateral but unsecured does not require collateral, which makes the creditor insecure to a certain degree if the lender fails to meet his financial obligation. By time frame, it can be long-term and short-term funding depending on the business needs.

There are various types of debt financing [10]:


*Term loans:* A loan with term installments, is usually a short-term loan that is settled by installments. There are two principal types of term loans:


*Start-Up Business Investment: The Case of Mongolia DOI: http://dx.doi.org/10.5772/intechopen.110075*

