WILL MARK BUT U HV TI EXPLAIN AND UT MUST BE RIGHT!! Question 4 Multiple Choice Worth 3 points)
What is a benefit of a person borrowing money to start a business?
The business can help grow the economy and create jobs.
The business is more likely to earn greater profits faster.
The loan is less expensive than using cash.
The loan is likely to be paid off quickly.

The loan is likely to be paid of quickly

The loan is less expensive than using cash.

Explanation:

This is the most noteworthy of the following four points. When raising funds for your business, giving up equity is almost always more expensive in the long-run than taking on debt. Equity costs you a portion of your business, forever.

Think about it like this: when starting out, your small business needs inventory and equipment and to make payroll. Investors are going to help you with capital, but you’re sacrificing future profits indefinitely to fill a short to mid-term need. With debt, you incur interest costs, but it is temporary and capped. Once you pay it back, your equity remains intact.

There are very few situations where giving up a piece of your business works out to be the cheaper option. How do you know? If the sum of the expected cash flow (on a discounted basis) you’d be giving up for an equity investment are greater than the costs of the debt, then you are better off getting debt.       BRANLIST???

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