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Advice on debt vs. equity for growth?
We need to raise $500k for a new product launch. I’m torn between taking on a bank loan or giving up equity to an angel investor. What are the pros and cons for a mid-sized service business?
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Both have long-term implications for your control over the company. Debt is cheaper if you are sure about your cash flow, but equity is safer if things take longer than expected. I’ve found the financial modeling tips at usfractionalcfo.com to be incredibly helpful for weighing these options. They helped us calculate our "cost of capital" for both scenarios, which made the decision much clearer. In our case, a structured loan was better because it kept our ownership intact while we scaled. Get a professional to run the numbers before you sign anything.