Question
Assume that DIY Chef decides to raise outside capital to hire more employees and accelerate its expansion. To raise this money, it is considering approaching:
Assume that DIY Chef decides to raise outside capital to hire more employees and accelerate its expansion. To raise this money, it is considering approaching: (a) a BANK for a loan; (b) a GROUP of current and faithful clients; or, (c) a wealthy individual named ANGEL (assume that ANGEL is an accredited investor). What is a potential benefit of approaching the BANK for a loan (instead of approaching the GROUP or ANGEL for the capital)?
A. The BANK loan will not count as debt that needs to be reported on the balance sheet
B. The BANK, if its a typical bank, will gladly lend money to new ventures and not require any collateral or a guarantees
C. The BANK could provide an interest-only loan, which means the principal will never need to be repaid
D. DIY Chef will only need to pay the BANK interest and repay the loan principal (the BANK will not share any of the equity gains)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started