There are many different ways to finance a startup. One way is to take out Long Term Debt for the business and use that money to expand or cover operating costs. The other way is to offer equity to finance your business. Both of these options have long term concequences.

Your startup might be a great idea, and have great potential. But without capital, it will never make it. One of the best ways to get capital for your business is to issue Stock.

The advantage of using debt to finance your business is that there is a tax shield associated with the returns on debt. This can in turn make it so your equity enjoys a higher percentage return than without the debt. This is called positive leverage.

I would like to thank Accounting Glossary.net for the useful financial terms.