Holicent
VIP Contributor
In the world of small business, finance is a major part of the puzzle. You need to get your finances in order if you want to keep growing and making money.
There are many different types of finance models out there for business owners. Some are more suitable for certain types of businesses and some are better suited for other kinds of businesses. It all comes down to what kind of business you want to run and how much money you want to make.
Here are some finance models for different spheres of small business:
Equity financing vs debt financing
Equity financing is when investors put money into your company as shares in exchange for part ownership of the company itself. They're not lending you any money — they're just investing alongside you in hopes that their investment pays off later on down the line when they sell it off at a higher price than they paid for it initially.
Debt financing is when a bank loans you money based on your ability to pay back that loan over time (usually 10 years). The interest rate on debt will be higher than equity, but it also has lower risk because it's backed by collateral such as property or equipment instead of just your name.
There are many different types of finance models out there for business owners. Some are more suitable for certain types of businesses and some are better suited for other kinds of businesses. It all comes down to what kind of business you want to run and how much money you want to make.
Here are some finance models for different spheres of small business:
Equity financing vs debt financing
Equity financing is when investors put money into your company as shares in exchange for part ownership of the company itself. They're not lending you any money — they're just investing alongside you in hopes that their investment pays off later on down the line when they sell it off at a higher price than they paid for it initially.
Debt financing is when a bank loans you money based on your ability to pay back that loan over time (usually 10 years). The interest rate on debt will be higher than equity, but it also has lower risk because it's backed by collateral such as property or equipment instead of just your name.
