What Are Business Loans And Their Benefits

Thursday, 5 March 2015 · Posted in ,

There are a number of ways you can finance your business. Whether you are just starting out, or are considering expanding and growing your business, you will need to make investments if the business is to have the assets it needs to get off the ground. Where are you going to find this money? Well there are a few lucky people who have enough assets of their own, such as savings, which they can draw on to invest in the business. Most people however, are not this lucky.

The Options

For them there will be two options, take on investors or take out a business loan. While taking on investors may seem attractive, given that you can rely on their support and experience, and don’t have to repay the investment, there can be substantial disadvantages.

The Drawbacks

For one thing, you will lose some control over the direction of the business. Investors will have a right to have an input in the running and direction of the business and they may not always see eye to eye with you. There is a chance therefore that you will lose control of your business. The other disadvantage is that investors will have a right to a share of the profits of the business. They may not seem like a good deal if you have to promise a way a proportion of all future profits of the business.

Talk To The Bank

The other option is to take out a business loan. Generally speaking, if you have a good business idea, and a sound business plan, then getting finance from a ban can generally be quite straightforward. The advantages of this are immediate, as you retain full control of the business and do not have to promise away a share of the future profits of the business.

A bank loan will not give a bank a say in the running of the business, although they will be interested in how you are doing as they have put faith in you. They also will not have a claim on your profits each year. You will however, have to make all your repayments on the loan and keep repayments on time and up to date. This will be the case whether or not the business is making money so you have to be confident that you have enough reserves on hand to continue with your repayments during lean months, especially at the beginning of the business.

However, the benefits keeping control of the business finances while keeping profits to yourself convince many entrepreneurs to opt for the business loan every time.

Keywords: loans, business, banks, company, debt, investor,

Leave a Reply

Powered by Blogger.