Business Loans and Equity Investments Buena Park CA

How to choose between getting a loan or selling part of your business to an equity investor. Both of these options of raising money for your business are compared to see which would be the best choice for you and your business.

Local Companies

AMERICAN FIRST CREDIT UNION
(800) 290-1112
1010 W. Chapman Ave, Suite 210
Anaheim, CA
Diversified Securities, Inc.
(626) 919-3456
1000 Lakes Drive #420
Glendale, CA
Southern Specialtys Inc
(714) 228-9099
6830 Artesia Blvd
Buena Park, CA
Simple Solutions
(714) 521-5225
14752 Beach Blvd
Buena Park, CA
In-R-Hands
(714) 739-5976
7071 9th St
Buena Park, CA
Import Part Depot Inc
(714) 523-0830
5160 Coral Ridge Cir
Buena Park, CA
Festival Management Group
(714) 952-4186
8308 On the Mall
Buena Park, CA
Service Craft Corp
(714) 739-4105
7151 Cate Dr
Buena Park, CA
Appolonia Seven
(714) 535-6039
3 Freeman Ln
Buena Park, CA
Adjoiner Inc
(714) 521-3788
6131 Orangethorpe Ave
Buena Park, CA

Provided By:

To raise money for your new business, you have two options: borrow money or sell part of your venture to an equity investor. This assumes, of course, that both options are open to you. In fact, you might not find a lender willing to lend you money or you might have a hard time convincing an investor to put money into your business. But you should nevertheless understand the trade-offs that come with choosing one over the other.

Here's a comparison of the pros and cons of each method of raising money.

Loans

Loans are often better for businesses whose cash flow allows for realistic repayment schedules and can't require a pledge of anyone's personal assets.

Advantages

  • The lender has no profit participation or management say in your business.
  • Your only obligation is to repay the loan on time.
  • Interest payments (not principal payments) are a deductible business expense.
  • Loans from close relatives can have flexible repayments terms.

Disadvantages

  • You may have to make loan repayments when your need for cash is greatest, such as during your business's start-up or expansion.
  • You may have to assign a security interest in your property to obtain a loan, which may place personal assets at risk.
  • Under most circumstances, you can be sued personally for any unpaid balance of the loan, even if it's unsecured.

Equity Investments

Equity investments are often the best way to finance start-up ventures because of the flexible repayment schedules.

Advantages

  • You can be flexible about repayment requirements.
  • Investors are sometimes partners or board members and often offer valuable advice and assistance.
  • If your business loses money or goes broke, you probably won't have to repay your investors.

Disadvantages

  • Equity investors require a larger share of the profits.
  • Your shareholders or partners have a legal right to be informed about all significant business events and a right to ethical management. They can sue you if they feel their rights are being compromised.

Consider Consulting With an Accountant

If you don't already know an accountant specializing in small business affairs, you may want to find one to help you make the decision. Your personal tax situation, the tax situation of the people who may invest, and the tax status of the type of business you plan to open are all likely to influence your choice.

To learn more about financing your business, and everything else you need to know about starting and running a business, get Whoops! I'm in Business: A Crash Course in Business Basics, by Richard Stim and Lisa Guerin (Nolo).


Author: Attorney Fred S. Steingold

Copyright 2008 Nolo
For more information visit Nolo Press

Featured Local Company

AMERICAN FIRST CREDIT UNION

8002901112
1010 W. Chapman Ave, Suite 210
Anaheim, CA

Related Articles
- How To Find Capital Buena Park CA
Starting a business requires funding in the form of start-up capital and initial operating costs. Although personal savings and loans may be adequate to start a small business along with a great idea, some businesses require a lot more capital.
- How To Create a New and Exciting Business Model Buena Park CA
- Finding Profitable Commercial Properties Buena Park CA
- Commercial Business Loans Buena Park CA
- Starting A New Business Buena Park CA
- Help For Small Business Buena Park CA
- Home Equity Lines Of Credit Buena Park CA
- Business Financing Buena Park CA
- SBA Loans Buena Park CA
- Secured Business Loans Buena Park CA
Related Articles
- How To Find Capital Buena Park CA
Starting a business requires funding in the form of start-up capital and initial operating costs. Although personal savings and loans may be adequate to start a small business along with a great idea, some businesses require a lot more capital.
- How To Create a New and Exciting Business Model Buena Park CA
- Finding Profitable Commercial Properties Buena Park CA
- Commercial Business Loans Buena Park CA
- Starting A New Business Buena Park CA
- Help For Small Business Buena Park CA
- Home Equity Lines Of Credit Buena Park CA
- Business Financing Buena Park CA
- SBA Loans Buena Park CA
- Secured Business Loans Buena Park CA
Related Local Events
ASD/AMD Merchandise Show New York
Dates: 9/13/2009 - 9/15/2009
Location:
Los Angeles, CA
View Details

Good Morning Long Beach
Dates: 6/17/2009 - 6/17/2009
Location: The Grand
Long Beach, CA
View Details

Financial Planning for ALL walks of Life
Dates: 6/16/2009 - 6/16/2009
Location: Weber's
Reseda, CA
View Details

Rss   Delicious   Digg   Add To My Yahoo   Add To My Google   Bookmark   Search Plugin

Topics:
Advertising Family Home Services Real Estate Resources
Business Services Fashion Industrial Goods & Services Retail & Consumer Services
Career Financial Services Insurance Software
Cars Food & Beverage Internet Technology
Computer Hardware Franchise Legal Telecommunications
Construction Health Miscellaneous Trade Shows
Education Holidays Nightlife Travel
Entertainment Home Appliances Online Database Weddings
Environmental Home Electronics Pets World History