Equity financing is money that is received from investors in exchange for a share of ownership in the business.

-     If the company goes bankrupt Equity contributions do not have to be paid back.

-     Your business assets do not have to be pledged as collateral to obtain equity investments.

-     Businesses with sufficient equity will look better to lenders, investors and the IRS.

-      With equity investment you do have to make debt payments.  Hence, your business will have more cash available..

-     In return for investing in your business investors will want a share of the profits and partial ownership of the business.  

-     You will have to share day to day management of the business with other owners (investors).

-    Dividend payments to investors in C-Corporations are not tax deductible.