StudentShare solutions
Triangle menu


Nobody downloaded yet

Extract of sample

As the name suggests, debt financing is borrowing money from some financial institutions, usually a bank, which you will have to repay after a certain period with interest. Entrepreneurs may borrow money for short term, which means for less than a year. Usually short-term loans are for financing working capital requirements, operational activities, filling the gaps in accounts receivables and inventory (Horne & Wachowicz, 2008). On the other hand, long-term loans, which are for more than one year, are usually the ones that entrepreneurs usually look for to finance their assets, capital, land, buildings, machinery and other costs of starting a business venture.
Clearly, debt financing has certain advantages. Firstly, the interest that is paid on these loans is tax deductible thus providing a tax advantage (Bygrave & Zacharakis, 2010). Secondly, as we will see that equity financing provides a part of ownership in the business to its financers, however, the same is not the case with debt financing. Lenders, unlike shareholders, do not get any ownership in the business and thus the entrepreneur retains the sole control of the business (Shim & Siegel, 2008). Thirdly, the entrepreneur usually will get many options with regard to the maturity time and the amount of interest payable per month or per year. Lastly, compared with equity financing, debt financing is less hassle and less time consuming, whereas it may take months for someone to appear on a stock exchange list and getting enough shareholders (Brigham & Ehrhardt, 2008).
However, the disadvantages of debt financing are significant as well. Firstly, unexpected changes in interest rates due to economic downturns, at times, create a disaster for borrowers (Horne & Wachowicz, 2008). Moreover, even if these economic downturns of macro environment events fail to alter the revenue and ...Show more


These people are the drivers of creativity, competitiveness, creators of an increased GDP and employment (Bygrave & Zacharakis, 2010). However,…
Author : solson
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Getting financing
In traditional concepts, business financing was considered as the essential element only at the time of business commencement. However, modern business concepts maintain that finance plays a more important role whenever the organization needs to move to the next business phase.
4 pages (1000 words) Essay
Long Term Financing of Companies
Financing may be of short term or long term. Short term financing is necessary for meeting the need of working capital when long term financing is necessary for a company mainly for expansion of its.
6 pages (1500 words) Essay
Financing the Mozal Project
Mozambique is one of the countries that is struggling the most in Africa. The Mozal Project is a business venture that can help improve the economy of Mozambique. Some of the benefits of the project include the creation of 5,000 construction jobs, 873 permanent jobs, $430 million in exports, $157 million GPD growth, and $161 million net foreign exchange.
5 pages (1250 words) Essay
Financing: Long Term and Short Term
Finance makes one of the fundamental requirements for establishment and good running of a business. Finance, however, may be acquired through different methods depending on its availability and the ease of repaying it. Financing means the provision of financial materials that a business requires.
10 pages (2500 words) Essay
The Need for Good Financing
With a bit of imagination, a smart mind, some personal charm, and the desire to work, anyone can find a way to make some cash end up where one wants it: on one's hands, ready to be saved or spent. Finding money is also known as financing, which is the word used by people in banks and in Wall Street to do the same thing that every kid in America and in every other part of the world does (Brealey & Myers).
3 pages (750 words) Essay
Financing Terrorism
Taking on the perspective of different thinkers and researchers on the issue, it attempts to provide as many viewpoints and angles as possible. This paper starts with brief references to the many definitions of the term and proceeds to address issues like -- Where and how terrorist organizations secure their funds; how these radicals/fanatics transfer money; what steps have been taken by governments to stop terrorist financing; the difficulties in tracking down terrorist financiers; and the important question of how regimes and governmental agencies combat terrorist financing.
15 pages (3750 words) Essay
Financing Terrorism
Taking on the perspective of different thinkers and researchers on the issue, it attempts to provide as many viewpoints and angles as possible. This paper starts with brief references to the many definitions of the term and
15 pages (3750 words) Essay
Long term financing of companies
If the firm wants to expand its business area then they have to plan for a long term period, because the expansion of a company is not a matter of some days.
7 pages (1750 words) Essay
Debt Financing and Bankruptcy
The chapter prevents insolvency by allowing companies to restructure and refinance. The plan stipulates that creditors take small portions or percentage of their debts due or alternatively receive payment over an extended period of time. When filing the chapter, the
3 pages (750 words) Essay
Financing Options
However, all such financing options suffer from certain underlying issues and drawbacks that affect the concerns and interests of the investors and the economy as a whole to some extent (D. Bell and C. Alex, “A New Fiscal Settlement for Scotland?”,
9 pages (2250 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment