Business Loans and Equity Investments New York NY

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

Commerce Bank, N.A.
(646) 344-4766
2 Wall Street
New York, NY
Doral Bank
(212) 329-3700
387 Park Avenue South
New York, NY
HSBC
(212) 689-3506
2 Park Avenue
New York, NY
Northfork Savings
(212) 685-2295
10 East 34th Street
New York, NY
MetLife
(646) 227-5037
260 Madison Avenue
New York, NY
The Community Preservation Corporation
(212) 869-5300
28 E. 28th Street
New York, NY
Citigroup-Smith Barney
(212) 503-2395
101 Park Avenue
New York, NY
Union State Bank
(212) 614-6870
11 East 22nd Street
New York, NY
Achelous Partners
(212) 808-9700
405 Lexington Avenue
New York, NY
UPRS Group, LLC
(888) 660-6740
875 Avenue of Americas
New York, NY

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

Commerce Bank, N.A.

(646) 344-4766
2 Wall Street
New York, NY
http://www.commerceonline.com/

Related Articles
- SBA Loans New York NY
Building your small business and helping it grow takes a lot of effort and, more frequently, a lot of money. More often than not, the amount of money a small business needs in order to grow properly is difficult to obtain without help from outside source.
- How To Find Capital New York NY
- Finding Profitable Commercial Properties New York NY
- How To Create a New and Exciting Business Model New York NY
- Help For Small Business New York NY
- Commercial Business Loans New York NY
- Secured Business Loans New York NY
- Business Financing New York NY
- Starting A New Business New York NY
- Home Equity Lines Of Credit New York NY
Related Articles
- SBA Loans New York NY
Building your small business and helping it grow takes a lot of effort and, more frequently, a lot of money. More often than not, the amount of money a small business needs in order to grow properly is difficult to obtain without help from outside source.
- How To Find Capital New York NY
- Finding Profitable Commercial Properties New York NY
- How To Create a New and Exciting Business Model New York NY
- Help For Small Business New York NY
- Commercial Business Loans New York NY
- Secured Business Loans New York NY
- Business Financing New York NY
- Starting A New Business New York NY
- Home Equity Lines Of Credit New York NY
Related Local Events
Fundamentals of Investment Adviser Regulation 2009
Dates: 7/17/2009 - 7/17/2009
Location: PLI New York Center
New York, NY
View Details

Private Equity Forum 2009
Dates: 7/13/2009 - 7/13/2009
Location: PLI New York Center
New York, NY
View Details

Understanding Financial Statements: Analysis and Case Studies in Accounting and Valuation
Dates: 7/1/2009 - 7/1/2009
Location: PLI New York Center
New York, NY
View Details

Response to Ponzi and Other Schemes: Alternative Investment Funds under Scrutiny
Dates: 6/30/2009 - 6/30/2009
Location: PLI New York Center
New York, NY
View Details

Private Equity XXV: National Business Innovation & Venture Capital Forum
Dates: 6/25/2009 - 6/25/2009
Location: The Yale Club New York
New York, NY
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