Basically there are two sources of business finance equity financing is one of them.

Equity Financing: The finance are divided by the man who planes for business and makes permanent investment in the form of land, building and mercenary etc. is called owners finance or equity financing. The profits retained in the business are also part of equity financing.

Advantages:

1. Freedom of control: The owner can freely control his business without any interference or pressure by the creditors.
2. Quality Products: The owners will pay proper attention for improving the quality of products. The reason is the befit of quality product goes to them.
3. No interest cost: The firm has not to pay any interest on the amount provided by the owner. The cost of production remains low as there is no burden of interest.
4. Earning remains with the firm: When the funds are provided by the owner for improvement in the business, the earnings of the enterprise remains with the owners. It is not shared by the creditors.

5. To tide over emergencies: As there is no burden of rate of interest, so the firm is in a better position to tide over recession period and other emergencies.
6. Ability to borrow: If a businessmen is financed well with equity capital, its ability to borrowed is improved.