Question
QUESTION 28 Assume that your new venture decides to raise capital to hire employees and accelerate its growth. It is considering approaching: (a) a BANK
QUESTION 28
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Assume that your new venture decides to raise capital to hire employees and accelerate its growth. It is considering approaching: (a) a BANK for a loan; or, (b) a VC firm for an investment. What is a potential benefit of approaching the BANK for a loan (instead of approaching the VC firm for an investment)?
The BANK could provide an interest-only loan, which means the principal will never need to be repaid
The BANK loan will not count as debt that needs to be reported on the balance sheet
The BANK, if its a typical bank, will gladly lend money to your venture and not require any collateral or guarantee
Your venture will only need to pay the BANK interest and repay the loan principal (the BANK will not share any of the equity gains)
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ISE Analysis For Financial Management
Authors: Robert C. Higgins Professor, Jennifer Koski
13th International Edition
1265042632, 9781265042639
