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Weighing Your Funding Options – Investors VS Lenders

by on May 24, 2017 in Funding Tips

Finding traditional funding (such as standard loans) is becoming increasingly difficult in today’s highly saturated market. Unless your product or service is a truly original and innovative invention, your only hope for finding funding outside of your own pocket is to highlight your competitive advantage.

This is especially true when it comes to investors vs lenders. While both lenders and investors are looking at your long-term numbers, long-term sustainability is much more critical to investors because they’re planning to be with you for the long haul.

Investors VS Lenders

There is a world of difference between lenders and investors. While both can supply you with startup or expansion cash for your small business, they have very different expectations of you in return.

  • Investor Expectations- Investors are actually buying a portion of your company. Rather than just letting you borrow their money. This means that they’re much more interested in your long-term profit margins. Not just your expected profit margins for the period that it will take to pay back the original investment.

         Your investors will also have a say in how you spend funds, what you do with your business overall, etc…

  • Lender Expectations- When you take out a loan, you’re essentially just borrowing the lender’s money. They’ll obviously expect you to repay them for what they lend to you, but they have no other involvement in your day to day business.

As long as you can make your monthly payments on your business loan, your lender doesn’t care what else you’re doing. The average business loan takes between 1-10 years to pay off. Outside of that window a lender is no longer invested in your business.

The Key to Success with Investors & Lenders

Whether you’re looking for loans or investments, the key to impressing potential funding sources is in your business plan. A solid, professionally prepared business plan that highlights your competitive advantage will reflect well in any meeting.

Contact us today to discuss what we can do for your business when we work together!

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