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Equity or Debt financing?


If you have business and you need to raise cash there are two options:debt financing which involves borrowing a fixed sum which is repaid with interest and equity financing where you sell percentage of your business to an investor in exchange for capital. Figuring how to finance your business is an important decision. Essentially you will have to decide  whether you want to pay back a loan or give shareholders a part of your company.

Advantages of Debt compared to Equity:
  • Lenders don't have a claim on a part of your business so the debt doesn't dilute your ownership of the company. Which means you will not have to share profits long-term. A lender is entitled only to repayment that you agreed upon plus interest rate.
  • Principal and interest obligations are known amounts which can be predicted and planned for.
  • Interest on the debt can be tux deductible, lowering an actual cost of the loan.
  • Raising capital through debt financing is less complicates and time consuming because you don't need to comply with state and federal securities laws.
  • When you don't have to share ownership of the company you are more nimble to take decisions on your own without seeking votes from shareholders.
  • With a business loan you are in control how money gets spent and  you can also add some discipline to your management team because you have to be manage the company in such a way to pay all your obligations.
  • Interest rates are usually lower than the return on equity investments.
  • It can be used by almost any kind and size of business.
  • Debt financing is a flexible category with different kinds of business loans with wide ranges in amount of money you borrow and length of payment.

Advantages of Equity compared to Debt:

  • You don't have to repay your shareholders. You sell them stock in exchange for money.
  • Also you don't have to pay any interest.
  • Investors take on almost all the risk and If your business fails you are not required to pay back investors.
  • With the right investors you can gain more experience, connections and more.
  • If your business fails you are not required to pay back investors.
  • For new business with no revenues equity financing can be your best if not an only option.

Here at Emry Capital we offer you line of credit or invoice factoring as a means of debt financing. We make business funding quick and painless. You can apply online and approval as fast as 20 minutes. We offer you flexibility, with no long term contract and prepay fees. Our advisers are available to walk you trough the process and help you obtain the funds you need.

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Location: West Palm Beach, FL, USA

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