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North Country Alliance
Doing Business Guide.
Financing Basics
The business owners provide most of the cash required to start a business. If more capital is required, owners will need to tap into outside sources, which fall into two broad categories:
When you go to your bank for a loan, you are seeking debt financing, which you will repay over a period of time at an additional cost (interest). The money you invest in your business is equity: that is, money that will not be returned to you unless you sell a portion of your ownership. Equity financing leads to sharing ownership of your business with the investor - debt financing does not.