Should You Take Debt Financing or Equity Financing?


Should You Take Debt Financing or Equity Financing?
As a small business owner, one of the things you may have to do is raise money. You may need money for short term engagements or long term growth. Two of the common ways in which you can raise the funds you need are debt financing and equity financing. You can observe the information about Glenn Corey by following the link.

What is Debt Financing?

When you borrow a loan from a lender, this is referred to as debt financing. Depending with the lender you choose, you can borrow from as little as $1000 to millions of dollars. The loan has to be paid back with interest over an agreed period.

For lenders to offer you a loan, there are a number of requirements you must meet. For example, your business must have been in operations for over a certain period. Your P&L statements must also be in order. The higher the amount of loan you are applying for, the more the lender will scrutinize your business.

What is Equity Financing?

When you raise funds by selling a part of your business to an investor, this is referred to as equity financing. The equity cash does not attract interest nor does it have to be paid back. Pick out the most interesting info about Credit Control.

However, when you raise equity cash, you may need to consult the lender before making significant moves about the business. Sometimes, you may disagree with the lender on the direction the business should be taken.

Which Financing Option Should You Choose?

Your needs should help you determine the best financing option to go for. If you need cash quickly, go for debt financing. Depending with the amount you need, you can access the cash in hours or weeks.  You should research well to find a lender that is suitable for your business. Also, check the terms of the loan as well as interest before applying.

If you want to raise equity finance, there are a number of things you should know. For example, most equity finance start in the hundreds of thousands of dollars. Therefore, if you are only looking for $10,000, this financing option would not be the one to pursue.

If you are not in a hurry to raise capital, either of the two options would work. For large small business loans, it can take months for the lender to scrutinize your business before approving your application. The time would nearly be the same like it would take to raise equity funds. Learn more about debt equity https://www.huffingtonpost.com/daniel-epstein/beyond-debt-and-equity-my_b_5553574.html.

The above is an overview of debt and equity financing.
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