Which of the following is a potential disadvantage when considering long-term loans as an option for raising capital?

Business

1 answer:

12345 [234]3 years ago

6 0

Answer:

A potential disadvantage when considering long-term loans as an option for raising capital is:

D. They require diluting ownership in organizations.

Explanation:

This potential disadvantage becomes a reality when the long-term loans are converted into shares. At this point, the ownership in the organization is diluted. Ownership dilution reduces the percentage of the ownership of shares in the entity. The investment becomes less attractive to the original owners since more owners are brought on board.

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