Most businesses, whether in start-up mode or in growth mode, require more money than initially anticipated to get to the next level.  This is especially true if the construction or renovation of space is required for the business to operate successful.  One thing to note is that a bank cares more about how you have performed over the last 5 years, while an investor is willing to take a risk on you, your idea, and your financial forecast. This means that if you are an established company, you most likely will find more success with acquiring a bank loan; whereas if you are a new company with no proven financial history, a private investor may be more willing to fund your idea – based on the financials of course.  Here are some factors to keep in mind.

A Bank Loan:

• Provides a consistent amount per month to repay
• Generally, loans are given at competitive interest rates within 60 days of application
• Additional products may be extended, such as a credit card or line of credit
• Generally, quite easy to obtain depending on credit and repayment history; requiring minimal documentation to receive

Private Investment:

• May require multiple meetings with potential stake-holders
• May take a longer period of time for the deal to close – Requiring you to put your growth plans on pause
• Repayment terms often involve a portion of revenue as well as shares or stakes in the company; something to think about if you are a family-owned business or a business with multiple owners.

If you are looking for more assistance or have more questions, we host a “Meet the Banker” session monthly online.  Click Here to Register:  Meet The Banker Masterclass