If you are a new business or expanding venture that only needs a little amount of money then it may be in your best interest to work with a private investor that can arrange a little loan for your business. These loans do typically come with a higher interest rate than a conventional bank credit facility, but a decision regarding your borrowing needs is often made much quicker. It should be noted that there are usually up front fees, known as points that a private investor will take in order to reduce the risk associated with lending to your business. You should never provide any up front fees to a lending party before a promissory note is in place. There have been a number of people that have been cheated out of their hard earned money by unscrupulous people that are simply looking to take up front fees without ever providing the loan that was promised to the business person.
One of the ways that you can receive a little loan South Africa from an angel investor or private funding source is to provide them with both payments on a regular basis as it relates to a little loan South Africa as well as dividend payments from the profits of the business. This type of capital raising, commonly known as royalty based financing, allows the investor to ensure that they receive an immediate return on their investment while concurrently allowing them to participate in the profitability of the business. Usually, this type of private investor loan is considered to be subordinated debt. If your business has any other credit facilities and your business does not work out as planned then the investor does not receive their capital back until all other lenders have been repaid. Most importantly, you are almost never required to provide a personal guarantee on this type of credit. However, you may need to provide a percentage of your business to this third party in exchange for a private investor loan.
In closing, receiving debt capital from a private investor can come in a number of different shapes and sizes. One of the things the deters business people in using this type of capital is the complexity that comes along with the transaction. However, if executed properly, obtaining a private investor loan is a great way for a new business or business owner with limited credit to receive the funding that they need for their business at a relatively low cost.
Private Lender List Download. No registration required! Includes Free Business Plan Template.
Matthew Deutsch is a prominent business plan writer. His work has been included in nine books pertaining to this subject. Additionally, Mr. Deutsch has written extensively on subjects regarding entrepreneurship, little business lending, angel investing, and other related topics.
Article Source: http://EzineArticles.com/?expert=Matthew_Deutsch
One of the ways that you can receive a little loan South Africa from an angel investor or private funding source is to provide them with both payments on a regular basis as it relates to a little loan South Africa as well as dividend payments from the profits of the business. This type of capital raising, commonly known as royalty based financing, allows the investor to ensure that they receive an immediate return on their investment while concurrently allowing them to participate in the profitability of the business. Usually, this type of private investor loan is considered to be subordinated debt. If your business has any other credit facilities and your business does not work out as planned then the investor does not receive their capital back until all other lenders have been repaid. Most importantly, you are almost never required to provide a personal guarantee on this type of credit. However, you may need to provide a percentage of your business to this third party in exchange for a private investor loan.
In closing, receiving debt capital from a private investor can come in a number of different shapes and sizes. One of the things the deters business people in using this type of capital is the complexity that comes along with the transaction. However, if executed properly, obtaining a private investor loan is a great way for a new business or business owner with limited credit to receive the funding that they need for their business at a relatively low cost.
Private Lender List Download. No registration required! Includes Free Business Plan Template.
Matthew Deutsch is a prominent business plan writer. His work has been included in nine books pertaining to this subject. Additionally, Mr. Deutsch has written extensively on subjects regarding entrepreneurship, little business lending, angel investing, and other related topics.
Article Source: http://EzineArticles.com/?expert=Matthew_Deutsch
