Equity v Debt
Financing

Businesses raise funds in one of two ways, equity financing and debt financing, and each has its benefits. 

Equity financing provides additional operating capital that may be utilised to build a business, but it will reduce the current owner’s share.

Debt financing does not involve the owner selling any of his shareholding, but will usually require security to be given, and regular repayments.

Often, the choice is dictated by the importance that the owners place upon preserving ownership of the business, and the availability of debt finance.