Choose your funding type
Last Updated: 2 November 2022
Compare the different types of funding available and choose the ones best suited for your business.
Debt and equity finance
Debt and equity are the two main types of finance available to businesses. Debt finance is money provided by an external lender, such as a bank. Equity finance provides funding in exchange for part ownership of your business, such as selling shares to investors.
Both have pros and cons, so it’s important to choose the right one for your business.
Funding type | Advantages | Disadvantages |
---|---|---|
Debt financing |
Retain full ownership No obligations after repayments Cash on hand quickly Interest is tax deductible Short and long term options |
Minimal opportunities for small businesses Repayments with interest Often requires collateral |
Equity financing |
No debt repayments Ongoing expertise and advice from investors Investors are prepared to wait for a return on their investment More cash flow available for the business Can provide funding for businesses that can't get a bank loan |
Forfeit of a portion of the business and revenue Indefinite payments to investors Ongoing consultation and consideration of investors when making decisions |
Sources of debt and equity finance
Sources of debt finance
Sources of equity finance
Common sources of funding
Three common sources of funding include:
Read more about each type to see if they suit your business and situation.
Crowdfunding | Venture capital | Business loan | |
---|---|---|---|
Funding type | Varied | Equity | Debt |
Finance provider | Individuals, investors, friends and family | Investors | Banks |
Reasons for seeking finance
Below are some reasons for businesses to seek finance. Read more about the finance options available for each.