An Insight into Equity and Debt Financing

Setting up a business is a question which always hunts our minds mainly because of two reasons. Firstly, we all like to do business, for the common reason that it will fetch you more money and freedom of work. Secondly, it’s human nature which persuades us not to take risks.
In this thesis the author likes to give you - the reader - an overall idea about the impact of the term ‘Financing’ in setting up of a business. When you decide to start a business, one of the questions that comes to your mind is how you can raise money to finance your business operations. Only then should you go forward with your financing plans. There lies the importance of the two financing terms ‘Equity Financing' and 'Debt Financing‘ respectively.
One thing that you want to be clear about is whether your family and friends want to invest in your business or lend you some money for your business. That is a crucial question. If they want to invest, then they are offering you equity financing. If they want to lend you money for your business, then that is quite different and is generally considered as ‘debt financing’.