Equity and Debt Management
                     EQUITY 
AND DEBT 
MANAGEME
NT
INTRODU
CTION
 Debt and equity financing are two very 
different ways of financing your business.
 Debt involves borrowing money directly, 
whereas equity means selling a stake in 
your company in the hopes of securing 
financial backing.
Source: www.businessnewsdaily.com
WHAT IS DEBT 
MANAGEMENT?
 Many of us are familiar with loans, 
whether we've borrowed money for a 
mortgage or college tuition. 
 Debt financing a business is much the 
same. The borrower accepts funds from 
an outside source and promises to repay 
the principal plus interest, which 
represents the "cost" of the money you 
initially borrowed.
Source: www.businessnewsdaily.com
TYPES OF 
DEBT 
FINANCING
 Traditional bank loans: While often 
difficult to obtain, these loans generally 
have more favorable interest rates than 
loans from alternative lenders.
 SBA loans: The federal Small Business 
Administration is a popular choice for 
business owners. The SBA offers loans 
through banking partners with lower 
interest rates and longer terms, but there 
are stricter requirements for approval.
Source: www.businessnewsdaily.com
TYPES OF DEBT 
FINANCING 
CONT.
 Merchant cash advances: This form of 
debt financing is a loan from an 
alternative lender that is repaid from a 
portion of your credit and debit card 
sales. Note that merchant cash advances 
have notoriously high annual percentage 
rates (APRs).
 Lines of credit: Business lines of credit 
provide you a lump sum of money, but 
you only draw on that money when you 
need some of it. You only pay interest on 
what you use, and you're unlikely to 
encounter the collateral requirements of 
other debt financing types.
Source: www.businessnewsdaily.com
PROS OF 
DEBT 
FINANCING
 Clear and finite terms: With debt 
financing, you'll know exactly what you 
owe, when you owe it and how long you 
must repay your loan. Your payment 
amounts will not fluctuate month to 
month.
 No lender involvement in company 
operations: Even though debt financers 
will become intimately familiar with your 
business operations during your approval 
process, they'll have no control over your 
day-to-day operations.
Source: www.businessnewsdaily.com
CONS OF 
DEBT 
FINANCING
 Repayment and interest fees: These 
costs can be steep.
 Quick start of repayments: You'll 
typically begin making payments the first 
month after the loan has been funded, 
which can be challenging for a startup 
because the business doesn't have firm 
financial footing yet.
Source: www.businessnewsdaily.com
WHAT IS 
EQUITY 
MANAGEMENT?
 Equity financing means selling a stake in 
your company to investors who hope to 
share in the future profits of your 
business. 
 There are several ways to obtain equity 
financing, such as through a deal with a 
venture capitalist or equity crowdfunding.
Source: www.businessnewsdaily.com
TYPES OF 
EQUITY 
FINANCING
 Angel investors: An angel investor is a 
wealthy individual who gives a business a 
large cash infusion. The angel investor 
gets equity a share in the company or 
convertible debt for their money.
 Venture capitalists: A venture capitalist is 
an entity, whether a group or an 
individual, that invests money into 
companies, usually high-risk startups. 
Source: www.businessnewsdaily.com
PROS OF 
EQUITY 
FINANCING
 Well suited for startups in high-growth 
industries: Especially in the case of 
venture capitalists, a business that's 
primed for rapid growth is an ideal 
candidate for equity financing.
 Rapid scaling: With the amount of capital, 
a company can obtain through equity 
financing, rapid upscaling is far easier to 
achieve.
Source: www.businessnewsdaily.com
CONS OF 
EQUITY 
FINANCING
 Hard to obtain: Unlike debt financing, 
equity financing is hard to obtain for most 
businesses. It requires a strong personal 
network, an attractive business plan and 
the foundation to back it all up.
 Investor involvement in company 
operations: Since your equity financers 
invest their own money into your 
company, they get a seat at your table for 
all operations.
Source: www.businessnewsdaily.com