Equity is how much money you or your shareholders would have left if you were to liquidate the company and pay off all the debts. On your balance sheet, your company's assets equal your liabilities plus your equity. Net equity and net assets are two ways to value a company and determine whether it's in good financial shape.
Net Equity
Banks analyze net equity when deciding whether to underwrite a business loan. It's defined as your company's current assets, after subtracting the company's total debts and inventory: That gives lenders a measure of how much your business is worth as collateral for a loan. If you're looking at buying a business, the company's net equity tells you how burdened it is with debt compared to the value of the assets.
Deficit Equity
If you calculate net equity and discover your liabilities are more than your company is worth, you have deficit or negative equity. When you're looking for a loan, negative equity is a red flag for lenders -- it may be a temporary fluke, but it's often a warning sign a business is going to collapse. Negative equity can happen when a company suffers massive losses, or saves up for liabilities it hasn't yet paid, such as legal damages or environmental remediation.
Actif net
Net assets is the measure of your total assets less your total liabilities. What differentiates it from net equity is that you include inventory along with your other assets. A company with $50,000 in inventory, $200,000 in other assets and $150,000 in liabilities has $100,000 in net assets but only $50,000 in net equity. If your company has inventory, fluctuations in inventory will make net assets change day-to-day; with investment companies, net assets also shift as the company adds and sheds investments.
Prêts
If your net equity is low or in deficit, that doesn't rule out getting a loan, but it does make it tougher. Expect to pay higher interest rates unless you're able and willing to put some of your own money into the company to improve the balance statement. Even if your net equity is positive, other factors -- such as your credit history and how big a down payment you can make-- still affect your ability to get a loan.