How do small businesses invest?

Finally, working within federal regulations limiting the amounts they can invest. Small business investments can take the form of equity or debt. Equity involves buying an ownership stake in the company in exchange for an infusion of capital, much like purchasing shares of a public company on the stock exchange.

What does investing mean?

Investing, broadly, is putting money to work for a period of time in some sort of project or undertaking to generate positive returns (i.e., profits that exceed the amount of the initial investment). It is the act of allocating resources, usually capital (i.e., money), with the expectation of generating an income, profit, or gains.

How do small business investments work?

Small business investments can take the form of equity or debt. Equity involves buying an ownership stake in the company in exchange for an infusion of capital, much like purchasing shares of a public company on the stock exchange. Debt investing is similar to giving the company a loan that will be paid back with interest.