Debt Financing – Debt financing is basically borrowing money from a lender in return of which we need to pay them interest. Thus debt financing i.e getting a loan for your business is the most common way out for financing.

Equity Financing – it is a way where you trade ownership of the business to the investors in return of their capital for financing the business. It involves a loss of control over business since the investors need to be sure the business succeeds.

Equity financing is more suitable for tech startups and companies.

There is always a dilemma as to what one must choose. It all depends on the situation and the purpose we are looking at.  If we want funds primarily for the working capital needs, day to day business needs which are relevant at transitionally profitable stage, then one must consider debt financing as a better option.

However equity investment is a wiser option where the utilization of the funds is for innovation, branding, scaling up, tech building.