How can I invest in a company without owning equity and without it being considered a loan?

UPDATED: Sep 30, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Sep 30, 2022Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

How can I invest in a company without owning equity and without it being considered a loan?

I am wanting to invest in a local business, but I don’t want the hassle of
owning equity, but I also don’t want to invest as a loan. Are there any options?
The business is incorporated as an LLC.

Asked on August 5, 2016 under Business Law, Georgia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

No, there really are only two ways to invest in a company: either with a direct investment which gives you an ownership interest ("equity"); or by loaning money in exchange for repayment with interest and/or a share or percentage of profit or sales (you can structure the repayment any way that works for both you and the company). All company investment is equity or loans, in one form or another.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption