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
- Maintain ownership
- Tax deductions
- Lower interest rate
- Costs less than equity financing
Drawbacks
- Repayment
- High rates
- Impact on credit rating
- Cash and collateral
Financing strategies
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Establish the fundamental step of an organization achieve it goals
- Matching approach
- Conservative approach
- Aggressive approach
Equity
Advantages
- Committed to business and intend projects
- Use the capital for business activities
- Explore and execute growth ideas
- Valuable skills, contacts and experience
- Credit issues gone
Disadvantages
- Demanding, cost and time
- Comprehensive background information
3.Provide regular information
- Potential conflict
- Legal and regulatory issues
- Share profit
- Loss of control
Types
- Angel Investor
- Venture Capitalists
- Crowdfunding
- Initial Public Offering