Borrowing vs. Equity for New Business
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If you borrow money to start your business, do your initial plans change versus using 100% of your own equity?
How do you determine the value of your business?
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Solution Summary
This solution discusses the difference in business plans for a company that borrows to start up and one that starts on its own equity. The solution also explains how to determine the value of a business. Additionally, the solution includes three reference source links for further research on the topic.
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Yes, your initial plans will change if you borrow money to start a business versus using 100% of your own equity. Borrowing money can sometimes be an advantage because the lender will charge you interest, but will not be a shareholder or partner in the business so it cannot tell you how to manage the business or share in the profits (www.NOLO.com). The only thing is that you will have to make the repayment on time. There are two ways to borrow, first from a commercial bank and secondly from friends and family members. To borrow from ...
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