Are you beginning to expand your business or perhaps, you are at the edge of launching it off? Regardless of your situation, one thing’s for sure and that is the fact that you need enough finances to pull it off. You have so many options to do such like by taking funds from your lawsuit loan with the help from mycaraccidentcashadvance.com or by taking out a loan.
On the other hand, while there are plenty of choices you can have, consider the type of finances you’ll be choosing very carefully. Whether you like it or not, it can significantly affect both your cash flow and obligations. And you do not want to have regrets in the imminent future.
So before you sift through your sources and get financing, here are few of the things that you should bear in mind:
- How much financing you initially need?
- Do you have a sound business plan?
- What’s your timeframe for repaying the loan?
- Could you pay back the loan?
Finances fall into two different types and these are:
- Debt finance – this is the money that’s borrowed from the external lenders similar to bank.
- Equity finance – this simply means you are investing your personal money from stakeholders in return for having partial ownership.
Of course, in both options, there are ups and downs. And you need to weigh each to be able to come up with a smart decision.
Advantages of Debt Finance
Let us get started with debt finance.
There are several benefits associated to it just like the fact that it gives you complete control of your business, your interest from the loan that’s been taken out is tax deductable and you also have the option to either have long or short term loan.
However, if you decide to go this path, you have to prepare yourself too because the loan needs to be paid back in given period of time. Also, repayment for the loan starts immediately after your application is approved and the loan is secured. Meaning to say, you must present collateral to be approved.
Now comes with equity finance. The beauty about this is the fact that it is less risky since you don’t have to immediately repay the loan and also, it’ll give you more cash on hand since profits don’t need to be used in repaying the loan. Lastly, investor/s provides additional skill sets and credibility to your business.
Likewise, it comes with its downsides too like investors wanting to have a part of the business and can always intervene in the decisions made and it could take your effort and time in finding the right investor.
So between the two, it is really a matter of personal choice.