{"id":4424,"date":"2016-04-04T10:47:30","date_gmt":"2016-04-04T15:47:30","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-finances\/debt-vs-equity-advantages-and-disadvantages.html"},"modified":"2024-06-06T04:00:51","modified_gmt":"2024-06-06T09:00:51","slug":"debt-vs-equity-advantages-and-disadvantages","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/debt-vs-equity-advantages-and-disadvantages.html","title":{"rendered":"Debt vs. Equity — Advantages and Disadvantages"},"content":{"rendered":"\n
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Debt vs. Equity — Advantages and Disadvantages<\/h1>\n
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In order to expand, it’s necessary for business owners<\/a> to tap financial resources. Business owners can utilize a variety of financing resources<\/a>, initially broken into two categories, debt and equity. "Debt" involves borrowing money to be repaid, plus interest, while "equity" involves raising money by selling interests in the company.<\/p>\n

Essentially you will have to decide whether you want to pay back a loan or give shareholders stock in your company. The following table discusses the advantages and disadvantages of debt financing as compared to equity financing<\/a>.<\/p>\n

Advantages of Debt Compared to Equity<\/h2>\n