Selling Equity Vs. Loans – What’s Better For Your Business?

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Selling Equity Vs. Loans – What’s Better For Your Business?
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There’s a strong emphasis on business investment at present, with companies increasingly concerned about their coffers against the backdrop of Brexit.

Whilst the government has moved to assuage these concerns by injecting an estimated £200 million into a state-run scheme designed to help finance businesses, however, some firms are continuing to weigh up their available options in terms of selling equity in their venture or applying for a commercial loan.

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We’ll compare these two options below, whilst asking which one is right for your business and circumstances.

Selling Equity vs. Loans – A Brief Comparison

Equity financing is a relatively simple concept, and one that requires you to seek investment in your business in exchange for shares that deliver a viable return over a sustained period of time.

In contrast, debt financing requires entrepreneurs to borrow capital from banks, credit union and financial companies, with this loan usually subject to variable interest rates and often secured against the value that exists in your business.

The benefits of debt financing are obvious, as this method enables you to retain all of the equity in your venture and therefore any potential profits. Loans are often quicker to secure too, but these advantages must be caveated by the fact tha