The disadvantage is that if you don't make payments the item can be taken away from you, since you are not strictly the owner. An overdraft is a lending arrangement whereby the bank will extend your credit up to a maximum amount, this form of finance should not be used to purchase machinery as interest costs tend to be high, so it should only be used for pay employee salaries when you do not have the funds available to do so. This form of financing may be useful in the short term but not in the long term. A business loan is a loan specifically intended for business use and like all loans involves the creation of a debt, which will be repaid with interest added. The advantage of this type of loan is that it is specifically aimed at businesses and for this reason will generally be secured by an asset owned by the business, but can occasionally be an unsecured loan. The disadvantage of a business loan as a funding source is that the interest the business will have to pay is non-negotiable, meaning that if interest rates are high, you may need to look