Debt Financing and Equity Financing for Businesses Bemidji MN
Allen J. Zutz, CFP®
403 4th St NW Ste 115
Thrivent Financial for Lutherans
Areas of Specialization
Charitable Giving, Comprehensive Financial Planning, Education Planning, Estate Planning, General Financial Planning, Healthcare Planning, Insurance Planning
Average Net Worth:
Not ApplicableAverage Income:
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Wells Fargo - Bemidji Westridge
2024 Paul Bunyan Dr Nw
Mon-Fri 07:30 AM-06:00 PM
Sat 09:00 AM-02:00 PM
Wells Fargo - Bemidji Mb
122 3Rd St Nw
Mon-Fri 08:30 AM-06:00 PM
Sat 09:00 AM-12:00 PM
Wipfli Hewins Investment Advisors, LLC
8665 Hudson Blvd N
St. Paul, MN
Ongoing Investment Management, Planning Issues for Business Owners, Advising Medical Professionals, Women's Financial Planning Issues, High Net Worth Client Needs, Retirement Planning & Distribution Rules
NAPFA Registered Financial Advisor, CFP®, CIMA, CPA/PFS
North East Asset Management
11465 Robinson Drive NW, Suite 250
Retirement Planning & Distribution Rules, Retirement Plan Investment Advice, High Net Worth Client Needs, Ongoing Investment Management, Planning Concerns for Corporate Executives, College/Education Planning
NAPFA Registered Financial Advisor, CFP®
Mr. Gregory L. Carlson, CFP®
3404 Bemidji Ave N
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Wells Fargo - Bemidji
201 3Rd St Nw
Mon-Fri 09:00 AM-06:00 PM
Summit Wealth Advocates, LLC
227 East River Parkway
Ongoing Investment Management, College/Education Planning, Advising Employee Benefit Plan Participants, Tax Planning
NAPFA Registered Financial Advisor, AIF, CFP®, CPA, PFS
Wade Financial Group Inc.
5500 Wayzata Blvd
High Net Worth Client Needs, Planning Concerns for Corporate Executives, Helping Clients Identify & Achieve Goals, Retirement Planning & Distribution Rules, Ongoing Investment Management, Tax Planning
NAPFA Registered Financial Advisor, AIF, CFP®
Galligan Financial Advisors
3460 Washington Drive, Suite 204
Ongoing Investment Management, Helping Clients Identify & Achieve Goals, Divorce Planning, Tax Planning
NAPFA Registered Financial Advisor, CFP®, CPA/PFS, MBA, MS
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Debt Financing and Equity Financing for Businesses
There are several advantages as well as disadvantages to debt financing and equity financing, and while not everyone understands the differences, they need to be understood. The first type of financing to look at is the most traditional, called debt financing. In simple terms debt financing means that you have loans for money that you do not have, this is why it is called debt, because you are in debt. Whether you owe this money to a bank, individual company, or even an investor you are under an obligation to repay the debt.
Some of the advantages to debt financing are that you are able to stay in control of your business. You are who decides what money is spent on, whom to hire, what hours of operation and everything else associated with your business. Another advantage is for your tax purposes. Simply put any money that you spend on interest rates you can deduct on your taxes. Depending on the amount of interest you are paying, this can be a huge tax saving.
One of the biggest disadvantages of debt financing is that too much debt can cause your business to look risky, or even unstable. While this is the most desired type of financing, you must ensure that your business is capable of making all debt payments on time.
The next major type of financing is called equity financing. This means that you are trading a piece of ownership of your business for money. This method is most often associated with angel investors and venture capitalists. One of the biggest advantages to equity financing is that you do not have to repay the debt in any way - you do not have to make a monthly or balloon payment to give money back to the investor. As long as your business is making money your investors are happy.
Another advantage is that your investors may be able to help you get debt financing. With the funding coming from several sources, you could give up less of your business and still get the funding you need. In addition, the investors may be financing other companies that can help your business out. Most reputable investors will only associate with reputable companies, so having a reputable investor helping your business automatically gives your business a bit of an edge over some competitors.
The disadvantage with equity financing is that you are giving away partial ownership of your business in exchange for money. This means that you are no longer the only person in charge of making decisions such as pricing, employees, merchandise, and suppliers. You will also need the other owner’s signature in order to apply for bank accounts, credit cards, as well as other forms of debt financing. One of the worse scenarios that can come from equity financing is that you end up being forced out of your business. This is generally caused by disagreements where the parties are unable to work together, and someone must be bought out. Typically, the party bought out is the one who originally started the business, simply becau...
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