SWEAT EQUITY LAW

When asked, "What is sweat equity?" Individuals will often consider the definitions used for houses, property, projects, enterprises/businesses, etc. Sweat equity is defined as the added value or increased ownership interest created by the effort or work of an individual. In regards to enterprises/businesses and start-ups, sweat equity is often exchanged for equity in the business entity. Because small businesses and start-ups often lack capital or financing to pay for particular services, sweat equity is an alternative method. Sweat equity can be used to pay employees for their services through stock options, etc.