Question

Distinguish between the different equity sources of financing. Consider the changing roles of equity sources of financing and how it impacts your healthcare organization.

Answer 1

Ans) Business owners can utilize a variety of financing resources, initially broken into two categories, debt and equity. "Debt" involves borrowing money to be repaid, plus interest, while "equity" involves raising money by selling interests in the company.

- Several types of equity financing exist for starting or growing companies.
Initial Public Offering.
Small Business Investment Companies.
Angel Investors for Equity Financing.
Mezzanine Financing.
Venture Capital.
Royalty Financing

- The biggest advantage of equity financing is that the investor assumes all the risk. If your business fails, you don't have to pay the money back. Without loans to pay back, you'll have more cash available to reinvest in your company. Your company could grow faster than it would if it were saddled with debt.