Raising equity is a great way for companies to generate capital without having to worry about repaying loans or giving up control of their business. Equity financing involves the sale of company shares, while debt financing involves borrowing funds that must be repaid with interest. Equity financing has several advantages over debt financing, such as not having to make monthly payments and not having to give up any part of the business. However, debt financing can be an attractive option for well-established companies that don't want to give up control of their businesses. When deciding between raising debt funds and raising capital funds, it is important to consider the restrictions and how much debt a company can raise.
For example, if the ABC company decided to raise capital solely with equity funding, the owners would have to give up more property, which would reduce their share of future profits and their decision-making power. Alternative lenders are non-institutional companies or individuals that offer faster, smaller, and more accessible loans to business owners. Traditional bank loans are also an option for companies that don't want to give up control of their businesses. Ultimately, the decision between raising debt funds and raising capital funds will depend entirely on your business and the stage you are at in your business journey.
