What are the main differences between corporate debt and equity? Why do some firms try to issue equity in the guise of debt?© BrainMass Inc. brainmass.com June 20, 2018, 10:36 pm ad1c9bdddf
There are two main types of financing for a business, debt or equity financing. Debt financing tends to be the type of financing you receive from a traditional bank loan and equity financing tends to be financing you receive from venture capital into your business from outside investors.
The benefit of debt financing is that it is a fixed sum financing and you will pay down the debt over time to a zero sum balance without any further obligation to the lender. ...
There are two main types of financing for a business, debt or equity financing. This solution explores both and explains the difference between the two. It also explains why some firms try to issue equity in guise of debt.