When you need more cash on top of the income your business is making, you basically have two choices – borrow the money or sell shares.
When you issue new shares you, as an existing shareholder get diluted and you own less of the company - a lower percentage. That doesn’t happen when you borrow money. The company will pay interest on the loan, but borrowing money will enable you to do and sell more, which increases the value of the company.
And you still own the same percentage – meaning you’re holding onto the increasing value.
If you can get a loan and the company can afford the repayments (capital and interest), then take it. It’s cheaper in the long run.
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