Debt & Equity Loans
Debt financing - Defined as a loan. When a business owner needs funds to pay for equipment or employee wages, he or she may turn lenders to receive a loan. The lender then becomes a creditor to the company and the owner must refund the credit and interest on the loan provided.
Equity financing -Defined as the method of raising capital by selling company stocks to investors. Although an entrepreneur does not pay back an investor for the money put into the company, the owner is required to give up a portion of his shares to the investor.