Private Equity Funds
This form of financing can be very useful to businesses that normally would not qualify for traditional debt financing for a variety of reasons.
Equity financing is simply the act of raising capital for company activities and needs by selling common or preferred stock to individual or institutional investors.
In return for the money injected into the company by the investors, shareholders receive ownership interests in the corporation.
Businesses usually turn to equity financing when they are unable to raise sufficient funds through retained earnings or when they have to raise additional equity to offset debt.
Some benefits of equity financing are a business does not have to worry about repayment in the traditional sense. As long as the business makes a profit, the investor or lender will be repaid.