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MGT 300 - Week 3 - DQ 1

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What are the benefits of using debt over equity? Which form of financing is better in the short
term? Which form of financing is better in the long term?
One advantage for the entrepreneur of using debt over equity is control. The entrepreneur can
still make decisions quickly without discussion to get a business moving, and stay resilient.
Equity financing can bring too many players into the mix, with their own opinions and
agendas. While this not necessarily always the case with equity partners, it is a risk. There are
usually good rates available from Small Business Administration lenders, and the interest is
deductible.
The form of financing which is better for short term versus long term, or even which is better
overall, has too many factors to make a blanket statement. The possibilities for equity
financing depend so much on the type and size of business, and what the investor's level of
ownership is. I personally feel that debt may be a better choice over the short term, and equity
over the long term. I see debt financing as an injection of capital to make a push or major
purchase. Equity financing on the other hand, might be more advantageous as a system of the
business.

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What are the benefits of using debt over equity? Which form of financing is better in the short term? Which form of financing is better in the long term? One advantage for the entrepreneur of using debt over equity is control. The entrepreneur can still make decisions quickly without discussion to g ...
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