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Author Message
08-08-2014, 11:23 PM
Post: #3
Isha saman [ Member From :N/A]
some positive points regarding Debt Financing:
Because the lender does not have a claim to equity in the business, debt does not dilute the owner's ownership interest in the company.
A lender is entitled only to repayment of the agreed-upon principal of the loan plus interest, and has no direct claim on future profits of the business. If the company is successful, the owners reap a larger portion of the rewards than they would if they had sold stock in the company to investors in order to finance the growth.
Except in the case of variable rate loans, principal and interest obligations are known amounts which can be forecasted and planned for.
Interest on the debt can be deducted on the company's tax return, lowering the actual cost of the loan to the company.
Raising debt capital is less complicated because the company is not required to comply with state and federal securities laws and regulations.
The company is not required to send periodic mailings to large numbers of investors, hold periodic meetings of shareholders, and seek the vote of shareholders before taking certain actions.
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Messages In This Thread
MGT201 GDB SOLUTION: - Pari Saba - 08-08-2014, 10:27 PM
RE: MGT201 GDB SOLUTION: - Isha saman - 08-08-2014, 11:14 PM
RE: MGT201 GDB SOLUTION: - Isha saman - 08-08-2014 11:23 PM

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