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Many business owners who want to expand operations or launch a startup need money. Equity and debt financing are two ways to go about securing money. Businesses that opt for equity financing inject cash into the company while those who choose debt financing borrow money to invest in the business. Equity financing makes sense if a substantial portion of the profits would be channeled into paying off the loan. In addition, business owners may not qualify for the type of loan they want to take out. Partners and investors can then offer financing and expect to receive a portion of the profit in exchange for their investment. If no profit is realized, business partners are not paid anything. Moreover, having no debt to repay translates into more cash on hand. By using the cash of your investors and your own cash, you can meet all startup costs rather than make considerable loan payments. If you are lucky to have experienced investors who are willing to invest in your business, they may offer valuable advice and business assistance. Having experienced investors is important for startups. You can choose from different investors, for example, angel investors and venture capital funding. It pays to do some research on your investors and choose them wisely. Equity financing has some disadvantages, and a main one is that if you fail to act in your investors best interest, you can face a lawsuit. Then, your investors gain ownership of your business, and how much they own depends on what they have invested in it. You should be careful if you do not want to share ownership. Investors are after your profits unlike banks, which only expect that you pay your loans back. Debt financing is another way to secure money for business expansion, but a portion of your profits goes toward debt repayment. You can still opt for debt financing if the cash flow you expect will be sufficient to pay off your debts. One of the major advantages to debt financing is that borrowers retain ownership of their business. Want to know more about [http:/www.greatbusinessmen.net/consolidation-and-alternative-options.html unsecured line of credit], go to this mortgage calculator for [http:/www.frugalcanada.org/options-for-unemployed-persons/ more options].If you make timely payments, you also build good credit. Having good credit makes it easier to obtain debt financing. Your lender cannot claim future profits from your business operations and if your company turns successful, you will reap the rewards by yourself. Unless you opt for a variable rate loan, you will know the exact amount of your monthly payments and total debt to repay. You can develop a plan to repay the principal amount and interest due. Lastly, with debt financing, you will not be held responsible by investors and do not have to send mailings to them periodically. With equity financing, unlike debt financing, the shareholders&rsquo; vote is important and you should seek it before taking certain actions. One obvious disadvantage is that you have to pay back the money at some point.