Can be an disadvantages or difficulties in keeping money in a bank?
Answers
Disadvantage: Long-Term Commitment
Bank loans do bring a longer-term commitment than shareholder investment. You only have to pay back investors if the business earns money. Banks expect their principal and interest payments every month, on time, whether you make money or not. If you fail to make timely payments, your personal or business credit rating slips, limiting your borrowing power in the future.
Having bank loan commitments on your balance sheet increases your debt-to-asset and debt-to-equity ratios, making you less attractive to new creditors as well as potential investors.
Disadvantage: Cash Flow Limitations
Another problem with borrowing money from the bank to grow your business is that it hampers your monthly cash flow. Over the repayment period, you commit a certain amount to repaying your debt. While the funds may help you expand initially, the debt obligations can make it difficult to keep up with monthly expenses and debt while also trying to generate cash and profits. Companies that become too leveraged with debt often get mired in stall mode for years. Plus, if you do not have adequate funds for marketing, it is difficult to attract and retain customers
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