Understanding Financing Options

What is equity financing?

• Equity financing involves borrowing money from banks.

• Equity financing is the method of raising capital by selling shares of a company.

• Equity financing is a loan that must be repaid with interest.

• Equity financing is the process of investing in real estate properties.

Name one benefit of debt financing.

• It has lower interest rates than equity financing.

• It does not dilute ownership.

• It increases equity ownership.

• It provides unlimited access to capital.

What is crowdfunding?

• A way to borrow money from banks

• A method for investing in stocks

• A fundraising technique used only by large corporations

• Crowdfunding is a way to raise money from a large number of people, usually via the internet.

Give an example of a crowdfunding platform.

• Kickstarter

• Patreon

• GoFundMe

• Indiegogo

What is a limitation of equity financing?

• Lower cost of capital compared to debt financing.

• Guaranteed returns on investment.

• Increased control for existing shareholders.

• Dilution of ownership for existing shareholders.

How does microfinancing help small businesses?

• Microfinancing increases debt for small businesses.

• Microfinancing eliminates the need for business planning.

• Microfinancing helps small businesses by providing access to capital and support services, enabling growth and sustainability.

• Microfinancing only benefits large corporations.

What is one benefit of government grants?

• They provide financial support for projects and initiatives.

• They create more bureaucratic processes.

• They increase taxes for citizens.

• They limit funding to private organizations.

What is a limitation of debt financing?

• Debt financing has no impact on cash flow.

• Interest payments are always tax-deductible.

• Regular interest and principal repayments can strain cash flow.

• It allows for unlimited borrowing without consequences.

Why might someone choose crowdfunding over traditional loans?

• Crowdfunding typically has lower interest rates than traditional loans.

• Crowdfunding guarantees a fixed repayment schedule unlike loans.

• Crowdfunding is often more accessible and allows for community validation of ideas.

• Traditional loans provide more marketing exposure than crowdfunding.

What is one challenge of microfinancing?

• No collateral required from borrowers.

• Low repayment periods for loans.

• Guaranteed profit for lenders.

• High interest rates for borrowers.