Advantages vs. Disadvantages of Equity business Financing?

Advantages

Less burden : There is no need to repay a loan with equity business financing, and monthly payment is not required by the business, especially for companies that don’t make a profit. This allows you to invest more in your industry.

Credit problems are gone :Equity can be more appropriate than debt financing if you are not creditworthy, either through poor credit history or a lack of financial track record.

Partner with you to learn and share your knowledge: You might be able to form informal partnerships with more experienced or knowledgeable people through equity financing. You might find well-connected people, which could allow your business to benefit from their experience and business network.

Disadvantages

Share profit : Your investors will demand and be entitled to a share of your earnings. It could be worth it if your investors bring value to you as financial backers or their business acumen.

Control loss : Equity business financing comes with many benefits, but you will have to share the control of your company.

Potential conflict : If there are differences in management style, vision, and running the business, it could lead to tension or even war. This is something to think about.

Deciding Factor

• This could be a better choice if your creditworthiness is a problem.
• You might be more independent and self-sufficient than a solo operator and benefit from a loan that does not require you to share in the decision-making or control.
• Would you rather own equity/share ownership than repay a loan from a bank?
• Do you feel comfortable sharing decisions with equity partners?
• You might consider a loan if you’re confident the business will make a profit.