Topic 6 : Financial Alternative

Debt

Short term financing

Allow company to quick access capital

Better way to overcome momentary liquidity problem

Long term financing

Involve multi-year repayment term

Have stricterlending standards for longer term

Advantages

  1. Maintain ownership
  1. Tax deductions
  1. Lower interest rate
  1. Costs less than equity financing

Drawbacks

  1. Repayment
  1. High rates
  1. Impact on credit rating
  1. Cash and collateral

Financing strategies

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Establish the fundamental step of an organization achieve it goals

  1. Matching approach
  1. Conservative approach
  1. Aggressive approach

Equity

Advantages

  1. Committed to business and intend projects
  1. Use the capital for business activities
  1. Explore and execute growth ideas
  1. Valuable skills, contacts and experience
  1. Credit issues gone

Disadvantages

  1. Demanding, cost and time
  1. Comprehensive background information

3.Provide regular information

  1. Potential conflict
  1. Legal and regulatory issues
  1. Share profit
  1. Loss of control

Types

  1. Angel Investor
  1. Venture Capitalists
  1. Crowdfunding
  1. Initial Public Offering