A new retail business is struggling to secure bank loans due
to a lack of operating history. The owner’s parents offer a loan to help the
business get started. What is the main risk of accepting this type of
financing?

Question

Answer

The loan cannot be reflected as a liability in the financial statements.

Answer

The lender may demand voting rights in the business.

Answer

The loan may dilute earnings per share.

Answer

Mixing personal relationships with business can lead to conflicts and operational interference.

Crowdly

A new retail business is struggling to secure bank loans due to a lack of opera...

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