Business organisations typically require initial and recurrent capital inflows to fund their operations and figuring out the best option for capitalising an organisation is an important decision which can have a major impact on the success or otherwise of any business organisation.
While various innovative forms of financing such as crowd funding and peer to peer lending are becoming more prevalent, this article focuses on more traditional debt and equity capital. A company in the context of this article refers to a company limited by shares, which is by far the most common vehicle for conducting business in Nigeria.
Though both debt and equity investments offer financial benefits to a company, they each have distinct features, risk levels and timelines. This article will briefly examine these two forms of capital investments and highlight relevant factors to be considered in determining the right form of financing a company may opt for.
