You’ve concluded that seeking outside investment is the best financing strategy for your business. You are confident that you will be able to access sufficient financing from outside investors, so what should your strategy be: debt or equity?
Most entrepreneurs generally use a combination of types of financing over the life of the business. In fact, certain types of loans will require that a business maintain a balance of equity and debt (called “leverage ratio”) that is appropriate for the stage of business and the industry in which it operates.
Canadian Bankers’ Association. Retrieved April 19, 2009, from http://www.cba.ca/lang.php
Schwartz, D. (n.d.). Debt vs. Equity—Advantages and Disadvantages.Retrieved April 22, 2009, from http://smallbusiness.findlaw.com/banking_financing/be1_5debtvsequity.html.