Advantages of a Small Business Loan over Getting Investors
A Home Business Article Contributed by Christopher Kyalo
Advantages of a Small Business Loan over Getting Investors
Not all home based entrepreneurs go for a small business loan. Many others opt to sell off a piece of the action instead. This is an increasingly popular option these days because it is no longer so difficult to find serious investors. Especially if you put the power of the internet to work for you.
But small business loans have many advantages over selling equity to get cash for your home business. Here are some of them.
When You Take a Small Business Loan, the Lender Has no Say in Your Business
This is probably the biggest advantage. The dream was yours and therefore you are bound to understand the business better. A small business loan retains you as the boss and leaves your dream intact. Meanwhile you just pay off the loan slowly over the agreed period of time. The only thing the lenders benefit from is the interest you pay on their capital.
When you sell off part of the stake in your business, you will quickly find out that you are no longer free to make all the decisions. The other investors will have their say and depending on the size of their stake, they will want to over- rule you.
The result is that even if the business ends up being successful, it will not be your business. Chances are high that it will end up at a very different destination from the one you mapped out for it as the founder. This is a problem you avoid when you simply get a loan and keep all the stake in the business to yourself and your close associates.
You Don't Have to Share Profits When You Take a Small Business Loan
At the happy moment when you home business is having funds injected into it by investors it is easy to forget that they are not lenders but people who will demand profits at the end of the year.
It can be quite painful after years of toiling to have your home business finally succeed but then end up with a substantial amount of the profits being claimed by other people who came into the game late. You avoid this problem with a small business loan because you will have no further obligations with your financiers when the last penny is paid back.
Getting a Small Business Loan is a Vote of Confidence by Financiers
The fact that you actually managed to get the small business loan means that you have received a vote of confidence from the hardest people on earth to impress, the financiers. It proves that despite your current financial difficulties which have led you to ask for the loan, there are some people out there who have confidence in you and the business.
In most cases where investors come in, they buy shares because they believe they have an idea or two to turn the business around. meaning that in many cases they do not vie your business as being workable in its current state.
