Question

In one to two sentences, describe one advantage and one disadvantage for a business when it receives a loan.(2 points)
under 200 words

Answer 1

One advantage of receiving a loan for a business is that it provides immediate capital, allowing the company to invest in growth opportunities, improve cash flow, or expand operations without diluting ownership. Conversely, a disadvantage is that loans incur interest and require regular repayments, which can strain the business’s finances, particularly if cash flow is inconsistent or the investment does not yield the expected returns.