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All you need to know about equity business loans

Starting or expanding a business requires a lot of effort and funds. It is often recommended that new or expanding businesses must refrain from utilising their personal funds for business purposes. So, most businesses turn to either debt financing or equity finance loans to meet their financial needs. Today, in this article, we will look at equity loans and how they can help your business in detail.

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All you need to know about equity business loans

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  1. All you need to know about equity business loans

  2. What does equity finance mean? • The funds are available in exchange for stakes in the company's ownership.

  3. Understand the working of equity finance • You can raise funds from the general public or big companies. • You need to share the profit with the creditors/investors.

  4. Pros of equity loans • Since it is considered an asset, it poses a zero credit risk. • It can assist in increasing your company's cash inflows. • The financiers assist you in building new business relationships.

  5. Cons of equity loans • You need to share the company's ownership and profits with the investors/ creditors. • You must provide the investor with information about your company's operations. • You need to inform the investors of your business operations. • Investors take part in your business decisions.

  6. Difference between equity loans and business loans

  7. Equity loans are available for a longer period, whereas business loans are short-term loans. • Equity finance is suitable for start-ups, whereas business loans are ideal for established businesses. • Unlike business loans, equity loans require a strong company plan.

  8. A business loan is a liability, whereas an equity loan is an asset. • Tax advantages are available for business loans but not for equity loans.

  9. Business loans are preferable to equity loans since they do not need you to share profits or ownership.

  10. Thank You Would Love to hear from you. Hero Fincorp Limited 09, Basant Lok, Vasant Vihar, New Delhi - 110057 Tel : 18001024145 Email : customer.care@herofincorp.com Website : https://www.herofincorp.com/ Know More : What Does an Equity Loan Mean in Business?

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