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Small business owners often opt for equity financing because they are not sure about qualifying for a loan, or they don’t want to part with cash profits to service the repayment. Investors and partners can provide equity financing.

Advantages of equity financing:

• Equity contributions do not have to be paid back even if your company goes bankrupt.
• Your business assets do not have to be pledged as collateral to obtain equity investments.
• Businesses with sufficient equity will look better to lenders, investors and the IRS.
• Your business will have more cash available because it will not have to make debt payments.

Disadvantages of equity financing:

• You will have to part with some of the ownership stake, and your business’s profits will be shared by other equity investors.
• You might have to contend with different ideas on how to run the business.
• No tax deduction on dividend payments.

Most businesses have a mix of debt and equity financing. Too little equity could prevent you from securing or repaying loans, while carrying little or no debt could indicate that you are too risk-averse, and that your business might not grow as a result.

Business Cash Advance, a Good Alternative:

Business cash advance is not a loan and the organization offering this cash advance gets their money from the credit card sales that the business does in a specific period, there by reducing the burden of paying back the loan and the terms and conditions to qualify for such cash advance are also relatively simple.

There are quite a few organizations which provide such cash advances. Organizations like MerchantCashDirect usually provides cash advance for working capital needs.

Ref a link for more info on Small Business Loans