Different Types of Financing

Different types of financing
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Advantages of issuing bonds
The advantage of issuing bonds to generate capital is that the entrepreneur can use the money raised for long before paying back. That, therefore, gives the business enough time to break even (Allan & Hall, 2009). Another advantage of issuing bonds to raise capital is that the company interacts with the public, and that helps to market the business brand, and hence the organization expands its market share.
Disadvantages of issuing bonds
Since the entrepreneur stays for long with the money raised from the public, bonds attract very high-interest rates and hence the business may incur more of its profits in the future to repay back the borrowed money. Issuing bonds exposes the organization to a lot of financial risks. For example factors such as inflation may increase the costs of financing the business through bond issuance (Allan & Hall, 2009). Furthermore, bond issuance involves a lot of advertisements to the public and hence the company incurs more costs in raising capital
Advantages of borrowing from Bank
Borrowing money from the bank gives the entrepreneur the freedom of pursuing any expansion strategy he or she feels suits the business best. Other methods of financing like equity borrowing deny the entrepreneurs the freedom of spending money to run the company because they must consult shareholders (Allan & Hall, 2009). Borrowing from the bank take...