Business start up. Investors vs. borrowing

The big difference is banks need collateral or some general way to recoup money, they aren't looking to make high risk investments.

I'd always borrow before you give up equity, but depending on your business this may not be possible.

If you don't have an established business with consistent cash flow and/or assets a bank will require you to give them a personal guarantee.

Banks will stay out of your way as long as you make timely payments and maintain your debt coverage ratios.

If you do take on investors just make sure you define the terms in writing and their expected level of involvement with the investment. Make sure these investors have true financial means to be making the investment. They can't be coming to you if they want cash to do a home remodel, etc like its a checking account.

Do not take on investors unless absolutely necessary without any other options. You want the business to be 100% yours', investors change that. Furthermore, your business changes from satisfying customers to satisfying your investors including sacrifices that may hurt your relationships with customers to satisfy investors.

Finally, if you can't manage the business initially without taking on a lot of debt for something outside of real estate then I'd seriously question the business.