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Financing long vs short term, raising capital via debt

1. What are the differences between short- and long-term financing? What are some of the popular types of short-term financing available to small businesses? Suppose you own a small business. What is a situation where short-term financing would be beneficial for your company? Explain why

2. Expanding growth within an organization requires some type of capital woven into their long term strategy. This is achieved, usually through debt, equity, or a mix of both.

Part 1) Name at least 1 financial instrument used in raising capital via debt, and at least one way through equity as well.

Part 2) What is more expensive to a company -- raising capital through debt or equity? State your reasons why! Note -- do NOT use the argument "it depends". Pick one side or the other, then explain and justify.

3. What factors would influence the decision to sell a component of the business to raise capital to facilitate growth of another component of the business? If you owned a small business, what factors would influence a decision to sell the entire business?

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1. What are the differences between short- and long-term financing? What are some of the popular types of short-term financing available to small businesses? Suppose you own a small business. What is a situation where short-term financing would be beneficial for your company? Explain why

Short term financing must be repaid within a year or less. Long term financing is not due or repaid until after a year or more, sometimes many years. Short-term financing for small business can includes vehicles such as lines of credit at a bank, selling of receivables (factoring), use of home equity loans, or working capital loans secured by inventory. Short term financing usually makes the more sense when you need cash to support the purchase of inventory and can repaid the loan when the customers pay this is a working capital loan and so the need is fairly short term just long enough to buy and sell and collect. Another situation where short term financing would be helpful is when you must buy equipment and install it and get it working before you can sell the old one. Getting a loan to for the salvage of the old one can bridge you until you can ...

Solution Summary

Your tutorial is 622 words and argues that equity is most expensive. Nine reasons for selling a small business are given.

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