The Difference Between Actual Debt and Equity

picture8Small business owners often face problems with the amount of operating capital they have; they either have to borrow or look for investors who would bring in the much-needed cash. When you borrow money, you end up with debt. Debt is pretty straightforward; you borrow the money, and you must repay it within a grace period plus interest.

Equity on the other hand is giving up a portion of the company to investors. If someone invested $100,000 in your business, the person becomes a stakeholder. Eventually, people would leave after they’ve earned enough. In such cases, you have to look for people who would re-invest the same amount of money into your company.

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