If you are planning to make major renovations in the business, whether you are planning buying equipment or add a new product line, you need business financing. But getting business finance is intimidating. Despite economic down turn, the banks are still funding. However, the way they are lending to the small business has changed significantly. As a result, you need to be cautious about how to finance, especially when considering funding your business through the bank. There are various factors that influence the financing requirements: the first one is credit score. Every type of business funding has certain pros and cons associated with it. First, let’s start with types of finance options available:
Business Funding in Texas, Florida and California offer various kind of bank loans like SBA loans, crowdfunding, receiving funds from venture capitalist, angel investors, borrowing from the relatives and friends or family members. If your small business is engaged in scientific development or research and development, you may qualify for extra grants. You need to solicit funds from different sources to get money you require or else invest your personal savings.
Advantages and disadvantages
Every type of financing offers set of benefits and pitfalls. For instance, venture money and own money need not be repaid, so you don’t need to incur any additional debt. If you borrow from relatives and family members, you may get advantage of lower interest rate as well as flexibility in the payment schedule. If you borrow money from banks, you don’t need to think twice, but the tough situation is you need to make repayment on the timely basis.If you borrow from family and friends, you need to consider what would happen if the business fails. If you default or can’t repay a bank loan you could lose the business
If you borrow from friends and family, you need to consider what would happen to your relationship if your business fails and you cannot repay them. If you default on a bank loan, you could lose your business and need to file bankruptcy. If you work with venture capitalists, you may need to relinquish some control of your operation.