debt is cheaper than equity. Interest on debt is a period expense that reduces your net income, lowering your tax liability. Equity is taxed on its full value.I guess that would depend on how you look at it. In my experience, debt can be expensive. It's just less expensive lately. I would rather have 100% equity and no debt service. Sure, you don't get to expense any interest, but the other 85% (after corporate taxes) you keep. You still have to spend the money to call it an expense. That said, borrowing money is an essential part of starting a business. And with rates like they are these days, it's not too expensive to borrow. Just watch your ratios and be careful.