What is the simplest form of external funding?

What is the simplest form of external funding?

• A. Issuing stock
• B. Secured bank loan
• C. Brokering a lease transaction to a funding source on a one-off basis
• D. Government grant

Answer: (C)

The key idea is that the simplest way to obtain external funding in this context is to act as an intermediary and broker a lease transaction to a funding source on a one-off basis. This keeps the process lightweight: you don’t put up capital, you don’t take on the borrower’s credit risk, and you don’t enter into long-term debt or equity relationships. The funding comes from a third-party lender or funder, and you earn a fee for arranging the deal. It’s faster and less complex than issuing stock, which involves equity dilution and regulatory steps; or securing a bank loan, which requires underwriting, collateral, and covenants; or pursuing a government grant, which often involves strict eligibility, lengthy applications, and ongoing compliance. So, brokering a one-off lease to a funding source embodies a straightforward way to connect funds to a deal without the heavier commitments of other external financing options.

The key idea is that the simplest way to obtain external funding in this context is to act as an intermediary and broker a lease transaction to a funding source on a one-off basis. This keeps the process lightweight: you don’t put up capital, you don’t take on the borrower’s credit risk, and you don’t enter into long-term debt or equity relationships. The funding comes from a third-party lender or funder, and you earn a fee for arranging the deal. It’s faster and less complex than issuing stock, which involves equity dilution and regulatory steps; or securing a bank loan, which requires underwriting, collateral, and covenants; or pursuing a government grant, which often involves strict eligibility, lengthy applications, and ongoing compliance. So, brokering a one-off lease to a funding source embodies a straightforward way to connect funds to a deal without the heavier commitments of other external financing options.