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FINANCING YOUR BUSINESS: LOANS VS. EQUITY
You can obtain cash for your business either from a
business loan or from the equity of your business.
Business loans:
A business loan is money that you borrow that you are
required to pay back. You will be obligated to make
monthly, fixed payments for your loan. Star Loan Services
provides business loans that can satisfy any short or
long-term goal.
Apply now for a business loan.
Advantages of business funding:
-- You are not obligated to give up any ownership of your business.
-- You are not obligated to give up any of your profits.
-- You have full control of how you run your business.
The only requirement you have is to pay your loan back,
timely and in full.
Disadvantages of taking out a business loan:
-- You must have enough money to pay back the loan.
-- You will likely be using your profits to pay back your loan. So, if you
have a lot of debt, you may not be able to show your
profit.
-- Your business will have to meet
certain criteria in order to secure funding.
-- You may have to have a co-signer for your loan.
Learn how to
prepare for applying for a business loan.
Financing via the equity of your business:
When you use the equity from your business to get
cash, you are agreeing to give up a share of your
business to the lender.
Advantages of equity financing:
-- Contributors do not have to be paid back, even if your business goes
bankrupt.
-- No collateral is ever needed.
-- Businesses with a good amount of equity will have no problem finding
lenders and/or investors.
-- More available cash flow as a result of not having to make any loan
payments.
Disadvantages of equity financing:
-- You are now sharing your business's profits with equity investors.
-- You are free to make business decisions without receiving input from
others.
-- Payments to your investors are not tax deductible.
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