After coming up with the idea for a new business, you will need funding to make your dream a reality. Two main options to consider when seeking funding are factoring and equity. By understanding the features of both and the role they play in finance, you can make the soundest decision for your new business.
Distinguishing Equity from Factoring
Equity financing raises capital by selling shares of business to investors. By purchasing shares in the company, investors become partial owners and receive a share of the profits. In an equity deal, you no longer own 100% of your company.
Factoring, on the other hand, is an alternative to obtain a traditional line of credit and provides available cash while the company grows. As a benefit, you get fast funding and retain control of your company. While building your business plan, consider your options for securing the capital you need to take your company to the next level.