Question

You have just started your business. However, you now require a cash infusion of $100,000. Do you secure debt or equity financing? Why?

Answer 1

Answer- If I am going to start my business then I would go for equity financing because it is better and less risky than debt financing.

The advantage of equity financing is that there is no burden of repaying the principal amount gathered through it. The investors will be given some ownership in the company and they also get some return if the venture is successful but there is no obligation to pay interest on the money taken or pay the full principal amount.

The investors are only provided with a good return on their investment and some part in decision making of the company. Hence, I would choose only equity financing as it will pose less burden on me.