Debt financing is when you borrow money through a lender which you repay with interest over an established period. Equity financing is when you take money from an investor in exchange for a portion of ownership in your company.

Both options will provide you with the cash needed but each has pros and cons. Debt financing can be expensive, because you will have to pay the money with interest, while equity financing requires giving up a stake in your company.

There are essentially two ways a company can secure funding: through debt or equity financing

Debt Financing

Securing funding through debt for a small business can be challenging primarily because let’s face it small business tend to be riskier. However, there are several loan guarantee programs specifically designed for small businesses through the Small Business Administration.

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From a simplified perspective and what is typically available to small businesses, equity comes in two different forms: diluted or non-diluted.

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Incentives and Other

The state of North Carolina through different agencies and departments, which include the Department of Commerce, Department of Agriculture and Consumer services, provides incentives, tax credit and loan guarantees to various types of business both existing and new.