At first glance, enlisting the help of an investor seems like the safest and most lucrative way for a small business to expand. Unlike small business loans, you don’t have to pay off debt, and you can access a virtually unlimited amount of capital. Even the failure of your business or the investment at hand wouldn’t force you to repay anyone. This is why equity financing is a popular choice for a wide variety of industries, most notably restaurants looking to add a second location.
But business owners who favor equity financing over debt financing are likely unaware of how much the lending industry has changed over the past decade or so. Thanks to the emergence of alternative business financing, borrowers no longer have to worry about the many downsides associated with taking out a small business loan from a bank. For example, the process of applying for a small business loan is now much less stressful and time-consuming than finding investors. Banks require mountains of paperwork and take several months to determine whether or not you’ve been approved whereas working with a company like United Capital Source is as easy as filling out a one-page application and waiting under 24 hours for approval.
Here are a few other reasons an investor is much riskier option than a small business loan in 2017:
Investors vs Funding Experts
Accepting an investment means giving the investor in say how you run your business. Some investors have extensive industry experience or will not interfere with your work but a great deal of businesses, particularly tech companies, have seen investors with no experience unapologetically obstruct their vision. How would you like it if your fitness center was, say, now being partially controlled by a former lawyer who knows nothing about what it takes to operate a gym? There are endless horror stories about investors, who have also been known to turn co-founders and key employees against the business owner. They don’t care about your long-term goals and prefer to simply make as much money as they can in as little time as possible.
The business funding experts at United Capital Source strive to establish close relationships with borrowers that do not end once the loan is paid off. When you take out funding with UCS, you gain a partnership with someone who has years of experience funding businesses very similar to your own. Your funding expert will provide sound advice for maintaining a healthy budget during dips in revenue and customize the terms of your funding to ensure minimal impact on cash flow. At UCS, the top priority is helping businesses grow and reach personal goals.
The Fine Print
Investors can promise millions in funding but according to Business Insider, most of them will not give you the entire check right off the bat. They are well aware that they are offering much more money than you actually need. In fact, you could probably fund your desired investment with just a portion of the money your investor promised. The investor will therefore give you just a portion of the initial amount and keep the remainder until you prove that you know how to handle a lot of money and can carry out an initiative smoothly.
Alternative business financing companies offer numerous funding programs providing a lump sum that you would receive in its entirety. The amount of money you ask for does not significantly lower your chances of approval or being assigned unfavorable terms. In addition to getting the exact you amount you are approved for, funding would reach your bank account in a matter of days. Your lender will have taken the time to learn about you and your business in order to put his or her trust in you.
No Extenuating Circumstances
Investors expect you to fulfill their expectations by a specific date and, as mentioned in the previous section, will often only give you the full amount you were promised after you have proven yourself worthy of handling a large sum of money. They often fail to realize that almost all businesses are subjected to cyclical, inevitable dips in revenue or mishaps that could stem from everything from bad weather to broken equipment to a backed-up supplier. These inconveniences might require more funding to overcome but your investor could very well refuse to lend you another dime.
United Capital Source designs funding programs to account for the unique circumstances of your industry. Many UCS clients own seasonal businesses, which means they experience dramatic decreases in revenue during certain times of the year, a.k.a the slow season. These clients were able to receive funding terms that allowed them to cover monthly expenses and day-to-day operations during this period while funding investments to grow their businesses. If your business is subject to period dips in revenue, consider letting UCS find the right program to make sure your business can handle the day to day while doing what it takes to fund your business for growth.
A Single Phone Call Can Make Your Decision
No investor can provide the same help as United Capital Source, which has provided business lines of credit, working capital loans, and credit card processing loans to countless businesses that were skeptical about paying off debt. Any uncertainties you might have about your business’s financial future can be answered in just a single conversation that will immediately show you why so many businesses feel comfortable dealing with us. United Capital Source takes pride in investing in your business, since we know just how helpful it can be when a business owner knows he or she isn’t alone for this crucial time in your career.