It’s a perfect match. Investors are always looking to make money and take part in new business ventures. Business owners are looking to expand and acquire capital to accomplish their goals. At some point, the two will connect and will address the issue of Debt and Equity Financing for Businesses.
Equity financing is where a third party investor gives money to a business in exchange for some control, profits, or appreciation in business value. Debt financing is where the third party investor gives money to the business in exchange for the business’s promise to repay the principal at a future date, plus interest. A good example of equity financing is a buy-in for a LLC membership shares or a purchase of corporate stock. Debt financing, on the other hand, is best illustrated in the form of promissory notes or structured repayment agreements.
Contact us if you would like us to review any sort of business investment contract — be it equity financing or debt financing — or would like us to draft and prepare any such documentation.