Inevitably throughout the operation of your business there will come a time in which you need more capital then you have available for a specific purpose or goal.
In order to accomplish this goal you must obtain the capital required, so how should you go about seeking your business funding.
There are really two ways in which to do this you can either borrow money from a third-party such as a bank or nontraditional lender or you can have investors give money in exchange for partial ownership in your business.
We will be discussing the advantages and disadvantages of both of these options.
If you decide that you need funding and you are considering business loans you should consider the effect this will have on the company's ability to operate from day-to-day.
In other words will a loan repayment plus interest have a detrimental effect in your company's ability to remain profitable or will it have a negative impact on your ability to pay for necessary business expenses.
Does the purpose of the loan justified borrowing money at the interest rate which you are offered? If this is not the case then you should definitely not consider a loan.
On the other hand if you decide to go with venture capital you do not have the issue of repay interest, but you will give up some ownership in your company in order to obtain this capital.
You should decide if this is something you are comfortable with before seeking capital investment.