Which Would Be Better, Equity or Loan, for My Satrt-up? - Loan Trivia


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Wednesday 26 July 2017

Which Would Be Better, Equity or Loan, for My Satrt-up?

Experts advise that at an initial stage investment should be made from your own pocket. If you have sufficient funds available then bootstrapping is one of the best options. But there are other options available if you don’t have enough funds to bootstrap. The most popular one is to avail an Engineer Loan for your startup from a bank or NBFC. If you are an engineer then you may have lots of ideas and propositions about various aspects of life. Although lack of funds can thwart those ideas and prepositions, you should never be disheartened. Besides availing a loan from bank or NBFC there is yet another option and that other option is to invest in an equity. Both these borrowings, i.e. equity and loans, have their own set of pros and cons. Let us see how a loan is slightly better than equity:

  • Process- Equity is very difficult to understand as compared to taking a startup loan
  • Flexibility- The lenders who provide you with a startup loan generally don’t have lengthy questionnaires. There is a bit of flexibility there for you. The only thing to be taken care of is that of timely repayment. But in case of equity you are accountable
Profit Sharing, involvement, charges, and availability are few other things where loans lead over equity.
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