The equity or loans - that is the question

The amount of money and its uses

Determine the amount of money you're looking for is essential. This question is strongly linked to the use of the money will, but must be answered separately. You may need funding for many things: the purchase of equipment, hiring new personnel, debt repayment, the purchase of supplies for the production, etc. The sum total is the quantity that interests us, since if the amount is quite high, equity becomes an option. Otherwise, you will be able to stay alone and resort to the banks or private lenders, provided that the credit of your company is good or you can provide collateral.

Requirements of the loan

Contrary to popular belief, business loans are meant only for businesses running. Usually lenders require the company to have a credit history for three years before considering borrowing money in the form of a business loan or line of credit. If your company is unable to meet this requirement may be necessary to obtain a personal loan. Since the loan amount will probably be considerable, it may be necessary to provide some kind of guarantee.

Requirements of investors

Investors in high-risk financial transactions, but are not suicide bombers. Society needs to show a future rather predictable with high yields, in order to compensate for the risk before providing equity capital for your business. However, investors are patient by nature and will not be required to repay the money as you would be dealing with a creditor. At least not in the near future since investors seeking high returns over long-term investment.

Capital Equity or Loans

If the amount of money that you need is not that high, probably prefer to resort to banks or private lenders in order to borrow money and repay in monthly installments at low cost. Reasonable prices can be obtained with commercial and personal loans, secured loans.

If you need more money, you may consider to group together with some investors. These will provide equity capital in exchange for shares of your company. You'll then have become business partners who share profits and losses in the same proportions as the shares each owns. Open your company to investors is something that sometimes you have to do to continue to grow. The key is knowing how and when to do it, in order to maintain control over company decisions.

As you can see there is no single answer to the question posed at the beginning of this article. The decision is yours, but be sure to weigh all the possibilities with its advantages and disadvantages before making your choice. A decision would determine the future of your company for many years to come .......