A growth business taking debt rather than equity is making a specific choice: it keeps ownership and accepts an obligation to repay regardless of how trading goes. For a business with predictable revenue, school fees being about as predictable as revenue gets, that is frequently the better trade, and it is available from development-oriented funds that commercial lenders would not match.
Education groups expanding school networks have used exactly this route, with debt investment funding new campuses alongside places in an accelerator programme.
Predictable revenue is what makes debt affordable
Debt requires repayment on a schedule whatever happens. A business with recurring, contracted or fee-based income can service that. A business with lumpy project revenue frequently cannot, and should be considerably more cautious about it regardless of how attractive the terms look.
Debt keeps ownership, which compounds over time
Equity given away early is given away permanently, and at the valuation of the moment. An owner who can service debt through a growth phase and avoid dilution holds substantially more of a larger business later. That is the central argument for debt and it is why owners with a choice often take it.
Development funds price differently from banks
Funds set up to back growth businesses with a social objective, such as expanding access to education, will lend where a commercial bank sees insufficient security. They also expect reporting on outcomes alongside the financials. Similar structures exist through institutions including the Industrial Development Corporation.
Stating the impact in numbers strengthens the application
Jobs created, learners accommodated, campuses opened over a defined period. Funders with a development mandate need those figures to justify the investment internally, and a business that supplies them credibly is easier to approve than one describing its impact in general terms.
Accelerator placement attached to funding is part of the deal
Where funding comes with a place in a scaling programme, the funder is managing its own risk by improving the business’s execution. Treat that as part of the value rather than as a condition to be tolerated, because the operational support is frequently what makes the repayment schedule achievable.
Frequently asked questions
When does debt suit a growing business better than equity?
When revenue is predictable enough to service repayments, since debt preserves ownership while equity is given away permanently at today’s valuation.
Which businesses should be cautious about debt?
Those with lumpy or project-based revenue, since repayment obligations continue regardless of whether income arrives on schedule.
How do development funds differ from banks?
They lend where a bank sees insufficient security, in exchange for reporting on social outcomes alongside financial performance.
What strengthens an application to this kind of funder?
Specific numbers on jobs created and people served over a defined period, since the funder needs those figures to justify the investment internally.
Why is accelerator placement attached to funding?
The funder is protecting its own position by improving execution, and the operational support is often what makes the repayment schedule achievable.
Further reading
Originally published in May 2017. Updated September 2026 to explain when debt suits a growing business rather than reporting a single investment.
