Difference Between Loan And Equity / Capital
Loan VS Equity / Owner's Equity / Capital Usually, Loa n is an example of Long-Term Liability / N on Current Liability , but there are also short-term loans and in that case, these are treated as Current Liabilities . Loans are payable by the business to outsiders while Equity is the rights of owners of the company’s business against the Assets of the business. In case of Sole Proprietorship or Partnership, the word “ Capital ” is used instead of “Equity”. A loan is taken from financial institutions like banks, etc., while equity is raised by issuing shares to owners or public in general. I n case of Sole Proprietorship or Par t nership, the capital is i nvested by ow ner or part ners to ru n the busi ness A Loan is an external source of finance while equity / capital is an internal source of finance of the business. There are different types of loans like shot-term loans, long-term loans, secured loans, unsecured ...