Getting a loan from friends or banks in order to start a business is called __________.

Question

Quizplus · Accepted Answer

Debt financing involves borrowing money from lenders such as friends or banks, and it is often a popular choice for entrepreneurs who want to start their own businesses. This type of financing allows entrepreneurs to obtain the funds they need without giving up ownership of their business or sharing profits with others.

A - Equity financing involves selling ownership shares in the business to investors in exchange for funds. This is different from debt financing where the entrepreneur borrows money but does not have to give up ownership.

B - Initial public financing involves selling shares of stock to the public for the first time in order to raise capital. This usually happens only after a business has grown substantially and needs significant amounts of capital to continue expanding.

D - Leasing involves renting or leasing equipment or property instead of purchasing it outright. While this can help conserve cash flow, it is not a financing strategy for raising capital to start a business.

Getting a Loan from Friends or Banks in Order to Start