Disadvantages and Advantages of Debt financing to an entrepreneur
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This hub “Disadvantages and Advantages of Debt financing to an entrepreneur” intends to highlight reasons why an entrepreneur should consider or not to consider debt financing as an option to financing his business.
Advantages
1. The lender has no say in the future or direction of the business as long as the loan payments are made.
2. Loan payments are predictable; they do not change with the fortunes of the business.
3 Lenders do not share in the profits of the business.
Disadvantages
1. If loan payments are not made, the lender can force the business into bankruptcy.
2. The lender can even take the home and other possessions of the owner of a sole proprietorship or a partner in a partnership to settle debts.
3. Debt payments increase a business’s fixed costs thereby reducing profits.
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Comments
You have stated some important information here. Certainly something to always be considered when starting out in a home business.
Not having enough capital in business ventures is failure before one begins. Having a sound business plan helps in identifying these obstacles.
I just read through a lot of the ads. There is a lot of information there. Short but informative.
short but a lot of knowledge....thanks for the info
short but a lot of knowledge....thanks for the info
TheMountainMan says:
4 weeks ago
Short and sweet and to the point. I like it! Great hub.