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Friday, October 11, 2019

Advantages of Equity Financing


Equity financing, if handled in a matured way, can change your financial well-being. It can also lower your financial burden, and you feel great. The advantages of Equity financing method such as:

The Burden of Repaying is Less – Equity financing offers less or practically no burden to the borrower to repay back the loan. There is no monthly or quarterly loan repayment model. This is a big advantage for businesses, especially the start-up businesses, which have limited paid-up capital and cannot repay the loan amount on monthly basis. In this way, you will be channelling more money into your business on daily basis. Therefore, this financing method is simply amazing and quite easy to get along with. In short, you do not have to think of paying the money to your lender each month. Everything is pretty streamlined.


No Reason to Show Your Creditworthiness – If you have been dealing with serious credit issues, with equity financing, you will ward off all serious issues immediately.  Equity financing in this case is more preferable method and even more suitable one than the debt financing method. The lender is not interested in knowing your previous financial track record. More importantly, they are also not unwilling to offer you loan. Equity is the biggest and most obvious thing you have to offer to your lender, and therefore, everything else is side-lined.

Gain from the partners – Equity financing is something that helps you to gain and learn. This financing helps you to engage into informal partnerships, and most often such partnerships are endearing. Over a period of time, these are able to get connected well with you, helping your business to get the potential benefits from their skills. Basically, you are not only borrowing the money with equity financing, you are also involving yourself in unique type of professionalism. All of it can be called a great experience altogether.

Few lenders provide you with the option of home equity loans, and that too without charging any upfront fee, or appraisal, or valuation or for that matter any kind of negative closing.  It is important that you read the fine print of the lender, and understand the hidden points in its offers. Generally, in the equity financing, lenders do not provide the details related to limitations, or restrictions or any kind of exclusions.  In case of Zero-Point equity financing, your lender can take out the weak points and try to refinance the mortgage for receiving the cheaper interest rates. Therefore, in case of “zero-point, zero-fee loan” lenders will charge higher interest rates and repayments on the mortgages.

While equity financing has good number of advantages, it is important that you, or the borrower has got his motive clear before the lender. If your motive is not clear, there are chances that you may end up in utter confusion, and everything is just becomes a dark conundrum altogether. Get yourself prepared for the equity financing, everything else is a matter of time only, for which you do not have to wait till eternity.

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