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Pros & Cons of DEBT Financing The advantages of debt financing include lower interest rates, tax deductibility, and flexible repayment terms. The disadvantages of debt

Pros & Cons of DEBT Financing
The advantages of debt financing include lower interest
rates, tax deductibility, and flexible repayment terms.
The disadvantages of debt financing include the potential for
personal liability, higher interest rates, and the need to
collateralize the loan
Angel and venture capital
A venture capitalist is a person or firm that invests in small companies, generally
using money pooled from investment companies, large corporations, and
pension funds. ... An angel investor is an accredited investor who uses their own
money to invest in small businesses
Extension:
a) If you were to start a new business retailing Premium Sneaker, which of
the following three sources of Equity Financing would you choose? Explain
why!
A) Circle your Choice:
a) Relatives and Friends b) Angels and Venture Capitalists c) Partners
B) Name one (1) Pro and Con of Each choice:
a) Relatives and Friends b) Angels and Venture Capitalists c) Partners
PROS__________________________________________________
CONS__________________________________________________
c) I chose__________________________ equity financing because...
______________________________________________________________
______________________________________________________________
_____________________________________________________________
Lesson Objectives:
Can you describe some specialized sources of financing?
Can you explain the advantages and disadvantages of debt financing?
Can you identify the advantages and disadvantages of equity financing?
Can you describe how debt and equity financing affect the balance sheet?
Vocabulary: angel investor; bank debt ratio; barter financing; collateral; co-signor; credit union;
customer financing; debt financing; equity financing; venture capital

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