Formation and initial growth of finance status, a typical example:

Many businesses originate with finance contributed by their owners and owners’ family. If they start as un-incorporated businesses, or turn into one, there are important differences between share capital and loans. Share capital is more or less permanent and can give suppliers and lenders some confidence that the owners are serious and willing to risk (relatively) significant resources. If the owners’ friends and families do not want to (or can not) invest themselves, the owners will have to look for outside capital.