Question

Is investing in a new friends business direct or indirect financing

Answer 1

Investing in a new friend's business is generally considered direct financing. In direct financing, an investor provides capital directly to a business, typically in exchange for equity (ownership stakes) or a loan. This contrasts with indirect financing, where funds are provided through financial intermediaries like banks or other financial institutions, which then lend the money to businesses or individuals.

In the case of investing in your friend's business, you are providing funds directly to them, which makes it a direct investment.