Getting financing presentation w5 | Business & Finance homework help
On the other hand, debt financing is more suitable for established businesses with a steady flow of income and tangible assets to use as collateral. This means that debt financing is more suitable for later stages of the entrepreneurial process such as expansion or market entry. Debt often comes with slightly higher interest rates than equity but does not require giving away ownership rights – instead, entrepreneurs can make payments back over time according to an agreed schedule. Credit cards and merchant cash advances are examples of common forms of debt that small businesses may use at different points throughout the entrepreneurial process.
Overall, both equity and debt offer unique advantages depending on which stage an entrepreneur’s business is in, so it’s important to choose carefully based on individual needs and circumstances when deciding which type of funding makes most sense given one’s situation.