Equity financing is the sale of an interest in a business entity, such as the sale of shares in a corporation or the sale of a partnership interest in a partnership. For example, when the Microsoft Corporation issues shares that are traded on a national stock exchange, the corporation is obtaining equity financing. Secured financing is loan financing that is obtained by giving the lender the right to seize and sell assets of the business if the loan is not repaid. For example, a corporation may wish to purchase new equipment without issuing additional shares to finance the purchase. The money may be borrowed from a bank, and a security interest in the new equipment is given to the bank.
Some businesses obtain their equipment through leases rather than outright purchases of equipment.
In this situation, the equipment is leased to the company, which repays the lease over time in the same way a private individual would lease an automobile. A security is an interest in an enterprise that is intended to provide a return to the purchaser. The Martindale-Hubbell Law Directory is the most complete, trusted source for identifying qualified legal counsel. Your access to and use of this website is subject to additional terms and conditions . Reed Elsevier Inc. All rights reserved.