• Equity can be profits that you retain in the business or new investment by you, your family or friends. In can also be investment from external sources such as venture capital provided by professional investors, by individuals investing as ‘Business Angels’, or an investment in your firm by another business (this is known as Corporate Venturing). External equity involves raising money by selling shares in your business in exchange for giving someone else a proportion of your profits and the future value of the business.
• Debt can be bank lending or overdrafts or it can be based on the assets of your firm, such as factoring and invoice discounting, or hire purchase and leasing. The debt is usually secured against the assets of the business or else is guaranteed by you or others. Your business must be able to generate enough cash to pay the interest on the money you borrowed.
• Grants may be available in certain parts of the country or for certain types of business projects. The most suitable financial package will depend on many factors, for example: what you need the money for, the kind of business you have and the market it operates within, your plans for the future and your ambitions for the business. Often the form of finance will be determined by what is available.