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Small Business Loan as a Funding Option

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AM

adri mari

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Crowdfunding

Funding Options for Entrepreneurs

Advantages

  • This is a viable and creative alternative to business owners that have been rejected when trying to get a small business loan.
  • It is a creative way to share your idea and also get constructive criticism from the target consumer
  • Pitching your idea online can require less capital and offering many marketing options because the content is shareable.
  • You do not have to pay upfront fees

Disadvantages

  • All projects must be approved by the hosting website.
  • If you do not reach your target-funding amount, you will have to return all of the invested money to the investors
  • Before launching an idea, business owners should patent or copyright their ideas. Businesses that do not do this run the risk of someone stealing their ideas and promoting them as their own.

By Adrienne Grimes

Small Business Loan

Advantages

Angel Investors

  • A bank allows more lending options with various interest rates
  • Bank loans simply lend the money with interest. They do not have any say-so in the business finances or its operations
  • Banks are allows located conveniently in local neighborhood. Banks also offer personalized services for its clients.
  • Typically, banks offer smaller interest rates than credit cards

Advantages

Disadvantages

References

  • The business owner is now connected with the investors now business associates and market/industry knowledge and expertise
  • Business owners are not required to put up collateral as a condition for getting the loan
  • Business owners do not have to repay the loan or repay interest on the loan

  • The application process is very drawn out and can be confusing to first time business owners.
  • Companies that have been running for an extended period of time have a easier chance at getting a loan compared to a new business.
  • Banks require some sort of collateral when giving a loan. This means that a business owner can risk losing their home if they do not pay off the loan.

Disadvantages

  • You must give up a share or percentage of the business
  • Investors have a “say so” in how the money is used and how operations are ran
  • It is uncommon for an angel investor to reinvest in a business due to the high risks associated with lending more money to an unsuccessful business.

OConnell, B. (2015). Pros and cons of venture capital and angel investors. Retrieved from http://www.entrepreneurship.org/emed/pros-and-cons-of-venture-and-angel-investing.aspx.

Dupree, S. (2015) Crowdfunding 101: Pros and cons. Retrieved from http://www.gsb.stanford.edu/ces/crowdfunding-101

Jospeh, C. (2015). What are the disadvantages of a small business loan. Retrieved from http://smallbusiness.chron.com/disadvantages-small-business-loans-246.html

Why are there so many different funding options?

Start Up Costs Worksheet Part One

There are a number of different funding options for different reasons. Having a variety of funding options provides a wide array of advantages and disadvantages for business owners and entrepreneurs. It is imperative that a professional weigh out the pros and the cons to determine which funding options best fits their financial and operational needs.

Start Up Costs Part Two

In Conclusion...

Based on the information provided, business ownre