The interest rates are not important, it is the style of loan and options attached that are. Seeking new investors is good, it shows you are growing. Taking out unsecured debt is a redflag.
Unsecured debt is the best debt to take out if you can. What matters is in fact the rate. The only reason to secure something is to get a better rate or because your lender requires it. You don't even want secured debt if you can avoid it. If amazon is getting a good interest rate on unsecured debt that means amazon is strong enough to force lenders to not require collateral which is a good sign. It's when businesses start offering up all their assets as collateral for debt you should start to worry.
I work in banking... I know what I'm talking about. You're just trying to find something to get all alarmed over. This is literally nothing.
And finding investors is the most expensive way to raise money because it dilutes the equity of existing investors at a rate equal to the expected rate of return on the equity (what investors expect to earn as a return on their investment). That rate of return tends to be around 10% for average companies on the stock market and probably around 12% for Amazon using rough numbers. The cost of equity tends to be considerably higher than the cost of debt.
The interest rates are not important, it is the style of loan and options attached that are. Seeking new investors is good, it shows you are growing. Taking out unsecured debt is a redflag.
Unsecured debt is the best debt to take out if you can. What matters is in fact the rate. The only reason to secure something is to get a better rate or because your lender requires it. You don't even want secured debt if you can avoid it. If amazon is getting a good interest rate on unsecured debt that means amazon is strong enough to force lenders to not require collateral which is a good sign. It's when businesses start offering up all their assets as collateral for debt you should start to worry.
I work in banking... I know what I'm talking about. You're just trying to find something to get all alarmed over. This is literally nothing.
And finding investors is the most expensive way to raise money because it dilutes the equity of existing investors at a rate equal to the expected rate of return on the equity (what investors expect to earn as a return on their investment). That rate of return tends to be around 10% for average companies on the stock market and probably around 12% for Amazon using rough numbers. The cost of equity tends to be considerably higher than the cost of debt.
https://www.investopedia.com/ask/answers/032515/what-difference-between-cost-debt-capital-and-cost-equity.asp
You're thinking on small terms.