There’s an old saying that it takes money to make money. As a business owner, you’re probably well aware of the truth within this adage. You must spend money to purchase inventory and services in order to sell your business’s own products and services. While you can always finance your business using a traditional bank loan, however, you should consider equity financing for the five following reasons.
#1) You Don’t Have to Repay It
Bank loans are a form of a debt financing, meaning you’ll have to repay them — usually with added interest. With equity financing, on the other hand, you keep the acquired money. Equity financing simply involves selling ownership stake in your business. As a result, you aren’t required to repay it. Whether you obtain $10,000 or $1 million through equity financing, it’s yours to keep.
#2) No Credit, No Problem
When initially starting your business, you may struggle to obtain debt financing because your business has little or no credit. The good news is equity financing is a viable alternative. Equity investment companies don’t look at your business’s credit. Rather, they focus on your business’s current and future prospective revenue. As long as your business is poised for a successful future, you should be able to obtain equity financing.
#3) Fast Cash
Equity financing is typically faster to obtain than debt financing. Banks can take months to approve an application for a loan. Even then, a bank may encounter problems that pushes back its approval date. Equity investors, however, are eager to finance the right businesses. As a result, you can obtain equity financing in as a little as a few days.
#4) Expert Help
You might be surprised to learn that equity financing can bring expert help to your business. Equity investors want the businesses in which they invest to succeed. If an investor purchases some of your business’s shares — defined as equity financing — he or she will benefit from your business’s future success.
#5) Simple and Easy
Finally, equity financing is simple and easy to obtain. To get the ball rolling, you’ll need to contact an equity investment firm to inquire about financing. The firm will likely review your business plan, as well as other documents, followed by providing you with a quote for partial ownership. Although it sounds like a complex process, equity financing is simple and easy.
What are your thoughts on equity financing? Let us know in the comments section below!