Debt versus equity finance
Most forms of funding fall into one of two camps. Let’s look at the main pros and cons of debt versus equity.
Published Tuesday 10 August 2021
The difference between debt and equity funding
Debt is a loan that you have to pay back. Equity finance is what you get when you sell a stake in your business to someone else. They are very different things.
This doesn’t have to be an either/or choice. A combination of both debt and equity funding might be best for your business at times. But it pays to know what you’re getting into with each.
Pros and cons of debt vs equity financing
Disclaimer
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
How to finance your business in the UK
Need finance for your business? Learn about the types of finance, approaching lenders and investors and more.
- What is business finance?
Learn how business finance works and find the right funding for your small business.
- How much business funding do you need?
Knowing how much money you need will help you choose the right type of finance. These tips will help you find a number.
- Debt versus equity finance
Most forms of funding fall into one of two camps. Let’s look at the main pros and cons of debt versus equity.
- Main types of finance
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- How to get a business loan
Find the right business loan and put together a strong application with this step-by-step guide.
- Peer-to-peer lending
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- Friends and family loans
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- Invoice financing
Turn unpaid invoices into working capital. Learn how invoice financing works and which type suits your business.
- How to find investors
Find the right investors for your business with this guide to funding types, where to look, and how to prepare.
- Angel investors versus venture capitalists
Angel investors and venture capitalists are alternative finance sources. What can they offer your business?
- How crowdfunding works
Learn how crowdfunding works, the different models, and how to launch a successful campaign for your small business.
- Small business grants
Find UK small business grants, check eligibility, and apply with confidence.
- Pitching for business funding
Learn how to pitch your business to investors and lenders with practical, step-by-step guidance.
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Now that you have your guide
Managing finances can feel overwhelming. With Xero’s powerful tools, small businesses can stay organised and confident.