ENTREPRENEURIAL FINANCE
DEBT FINANCING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When starting a new business
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If there was an unforeseen expense and you need money now
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Either A or B
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None of the above
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Detailed explanation-1: -Start-up small businesses may use equity financing or debt financing to obtain money when they are cash poor. A bank loan is a form of debt financing used by small business owners. Equity financing means allowing stakeholders to own part of the business.
Detailed explanation-2: -To get debt financing, a corporation will need to provide collateral. For equity financing, the corporation doesn’t have to provide any collateral. Since the firm already has approved share capital, it is easier for them to issue more units.
Detailed explanation-3: -Simply put, equity financing is a means of financing a venture through giving away equity or shares in your company in return for funding. This means that an outside investor will own a part of your company.