Business Services Industry
hold'EM
Entrepreneur, July, 2000 by Cynthia Harrington
* The company turns a profit sooner because owners must make cash to serve the debt and have access to additional credit.
Cons:
* Not all companies have access to debt financing; lenders want collateral in land, equipment, or a patent.
* If the company doesn't make payments, it loses everything.
* Growth is limited to internally generated cash flow, or additional credit based on the company's profitability.
* Lenders want equity and convertible debt dilutes ownership.
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