View Full Version : What should I do raise capital through Investor or Bank?

03-10-2014, 02:40 AM
This question has been on the top of the head for sometime now. What should I do? Should I look at an investor for raising money or go to a bank? Both will anyways require a business plan, so that is out of the equation. What are the pros and cons of both?

03-10-2014, 01:56 PM
I would go with the bank. If you get the capital from an investor, he will want something in return. You'll have to weigh the amount of money you'll lose to the bank to the percentage of business the investor wants in return.

03-10-2014, 04:42 PM
I would also go to the bank first. But if the investior gives you a grea deal it is also a good option!

03-10-2014, 06:42 PM
I personally would opt for an investor first if I can manage it. The reason for this is that I think an experienced investors knowledge and resources is sometimes a lot more valuable than the monetary aid he or she is able to provide, and if I can gain an audience with them, then I certainly would consider it as being a much better option than just having a lifeless backer in the form of a bank. If, however, you only seek the financial side of things and need no further assistance beyond that, then a bank may just be more advisable since they do tend to keep you working independently.

03-10-2014, 10:01 PM
I'm wary of dealing with investors. If you absolutely have to go that direction, I understand. That being said, I think the bank is a better option, especially if you have a good business plan. In my opinion most investors are going to try and take advantage of you. They'll either screw you if the business fails, or if it succeeds try to take all of the credit. This obviously doesn't apply to all investors, but I don't believe it is a risk worth taking.

03-11-2014, 04:38 AM
Thanks delusional!

It is good to have your view on this matter. Only problem with the bank is that there would be no special inputs coming in.

03-11-2014, 04:38 AM
Maybe the great deal part needs to be explored more.

03-11-2014, 04:42 AM
Hi Idlecuriosities,

Part of your answer was something even I was thinking. The pro of an investor is the fact that I will get some definitive intellectual inputs, leave alone leads for the business. Of course, the cons are there too, but then the banks are also not going to be too kind if I lose right? Thanks for the inputs though.

03-11-2014, 09:55 AM
I would recommend you to start crunching some numbers asap. You should start off by estimating what your bottom line will be if you take up a loan. So, this would be all your estimated expenses plus the interest which you would have to pay. And then you should compare this figure to the one which you calculate after reducing the share of the investor's profit/loss. It has also to be noted that interest will have to be paid even in the case of a loss and also a collateral will be required for obtaining a loan.

03-11-2014, 11:32 AM
I would definitely go with a bank if possible. Investors can be a bit tricky, especially if they will own a larger portion of your company due to having invested money. Besides, banks will probably be fine with a slow payback rate (since that means more overall interest) which might be necessary for a new company.

03-12-2014, 03:49 PM
What kind of an idea do you have OP ?

03-13-2014, 09:33 AM
I will suggest to just raise your own money and not deal with banks. The interest rates are just really high but you wont notice it but if you calculate it, you will realized that you've been kind of ripped off. But if you really must, all you need to have is a clean credit record.

03-13-2014, 12:04 PM
I will suggest to just raise your own money and not deal with banks. The interest rates are just really high but you wont notice it but if you calculate it, you will realized that you've been kind of ripped off. But if you really must, all you need to have is a clean credit record.

You're right that high interest rates do make you feel like you're getting ripped off. But sometimes you have a great business idea and need some help getting off the ground. I think this is the real benefit of a loan.

03-13-2014, 01:34 PM
I would definitely go with a bank if possible. Investors can be a bit tricky, especially if they will own a larger portion of your company due to having invested money. Besides, banks will probably be fine with a slow payback rate (since that means more overall interest) which might be necessary for a new company.

I do agree with this point of view that but there is a catch when you want to get a loan from a bank, which is that they demand a collateral prior to giving out a loan. This collateral is basically their insurance policy in the case where their money is not paid back. I would also like to mention that investors, generally, are not interested in making profits during the initial years of the business, so in a way, a business is able to procure capital very cheaply during its critical initial years.

03-13-2014, 09:23 PM
I would go with the bank anytime. Investors are always money oriented and if the business is not doing well, then they will pull out and put their money somewhere else other than your business. Well I think that is just the way it is.

03-14-2014, 03:44 AM
Going to a bank means getting a loan that requires prompt payment. Defaulting your repayment plan means putting your business at risk if they decide to auction your business' equipment and/or stock. An investor is preferable but it also depends with the type of investment made. Is this an investor approaching your business as a loan shark or someone with genuine interest in your business' success? Make sure that the terms of the investment are stated clearly on paper and I would suggest that you be willing to give shares of your business to this investor to be able to sustain the relationship and also as a just in case so that even when you go to court, it shows clearly that the investor knew what they were doing. And never give up control of your business. Give shares in terms of the business' growth potential and not what the business is worth as compared to what the investor is willing to give you because that would mean losing control really quick.

03-19-2014, 05:53 PM
I would go with the bank anytime. Investors are always money oriented and if the business is not doing well, then they will pull out and put their money somewhere else other than your business. Well I think that is just the way it is.

Very true! They can really halt a good growth company.

03-20-2014, 04:10 AM
It depends on the investor of course. Recently I've been seeing the Shark Tank TV show and I think everyone would want an investor like that, that really pushes the business forward. But if the investor doesn't care about your business maybe you're better off with a bank.

03-30-2014, 01:15 AM
If it's a small business, sometimes you can find some luck with local credit unions, especially if you have been a long-time customer. I would abstain from finding individual investors for a small business because you'll fall into a lot of conflict between your goals and those of the investor.

03-30-2014, 07:54 AM
Investors are better. You wouldn't want to be caught up in loan shark banks that would get you paying until your death.

04-25-2014, 04:30 AM
Most of the time, bank is the best option especially if you don't know any investor that can fund your business. However, there are times that having an investor rather than asking for a loan from a bank pays good specially if your investor offers you a good deal.

05-12-2014, 12:05 PM
My opinion on the Pro's & Cons

Option1: The Bank is going to be your best bet for cheap money. Right now there are a ton of banks out there loaning money for nothing. The only problem I foresee is qualifying for something like this.

Option2: An investor is an investor for a reason. He's lending you money higher than what he can put the money in the bank for. He does have skin in the game since he wants you to do well and to get his money back. Sometimes having too many opinions in the mix especially if this is your new business can be a big problem considering you're the one hustling and in the everyday grind of the business.

I've had investor partners as well and unfortunately most of them have been friends which is a whole new issue on it's own. Businesses fail, and they end up pointing the finger at you since you didn't have any $$$$ in the game.

05-12-2014, 12:15 PM
I would start out small and part time. The amount of time to implement a marketing plan is tremendous It will take you time to make your first sale

05-14-2014, 08:38 AM
There are various pros and cons of both the sources. The major advantage of raising capital through banks is that you can get a sense of trust and also it will be helpful in certain amount of tax relief, however the biggest disadvantage is that it's really tough to get funding from banks. There are various conditions which we need to fulfill for that purpose. The main advantage of funding through investor is that it's much faster to apply as compared to banks and in case the business fails you will not be homeless. However the disadvantage is that they may ask you to share profits with them and still you need to gain their trust.

05-16-2014, 08:29 PM
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05-17-2014, 01:23 PM
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Michael Thompson
05-24-2014, 06:51 AM
I thin bank will be best option as banks can offer good packages for the payment and also for the repayment. Good luck !

05-25-2014, 01:58 PM
Hi, Oivas. I think, if you have the favorable credit, I would go with a loan from a bank. Here's why: 1) With either, you are going to be required to pay interest on the money but, after the loan from the bank is payed off, you are done with them. If you take on an investor, you will likely have to give up a percentage of your business... possibly for the life of the business! 2) Building on the first... with an investor on board, you are no longer a true entrepreneur. You now have a partner, either silent of otherwise.

There are benefits to having a partner, especially if they have experience in your market. I guess the bottom line is just to do what you feel is the right choice for your business. I hope this helps.

Best of Luck,

Matt & Shana

06-06-2014, 03:39 PM
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06-06-2014, 10:43 PM
One of the primary duties of an entrepreneur is to continuously raise capital for his or her business. But what happens when that business is still in its startup stage? How will an entrepreneur raise capital for a new small business startup? I intend to use this article to reveal the fundamentals of raising capital for your business.

09-15-2014, 03:04 AM
Most of the business raise capital through bank loans, credit card and taking loans from the angel investor. Loans are beneficial for the small business because the owner will not have to share equity in a company.

09-17-2014, 10:26 AM
I have read the responses to this question. While a lot of people have opinions - it really depends on your project. If you have solid collateral (banks require) then you may get some good terms - but make sure yo have the ability to make the payments and know if you fail to make payments - the collateral now belongs to them AND you still have to pay back the note.
When looking for investors - make sure you get with a good investment group. Not all investors want the lions share. Investors are a great asset because most investors realize it will take time for a start up company to begin making a profit. Investors are willing to wait for their money if your have a solid project. Investors require you to have skin in the game (so do banks) to share in the risks.
Remember this - you are asking an investor to use their hard earned money to finance your dream - so yes they require a percentage of the business in return - which I feel is very fair.
It all depends on your project - there is no right or wrong answer - just which option is in your best interest and the way to find that out is to try both and see which is better for you short term AND long term. Good luck.

11-29-2014, 08:09 AM
I think its good to make your investment in panda coins or bit coins or in any of the internet based currencies rather than searching for an investor.

12-08-2015, 02:39 AM
We can look to a investor for raising capital it require according to business plan. Bank also look to investor for raising money.

Malik Suleman
12-28-2015, 02:24 PM
bank is the best option

01-01-2016, 03:17 AM
As per my opinion, bank is the best option to raise capital, because banks can offer distinct great terms and interest rates.

01-29-2016, 06:33 AM
Neede to make a list of your fund and investments. Once you have calculated the capital that you still need to invest, you can ask for investments from investing firms or a venture capital firm. Such firms can give you lucrative offers to raise capital. Keep in mind that you will be paying a considerable amount of interest when you raise capital through a venture capital firm.

03-08-2016, 01:08 PM
If you can withstand the cash-flow, it is always better to go with a bank. Think of an investor taking a percent of your company forever. It's a much higher cost than just about any financing you can get. And to make them go away, it will likely be many times (I'm talking 10 to 100) more expensive than the cost of the loan you need now.

11-12-2019, 12:22 AM
Bootstrap your business.
Launch a crowdfunding campaign.
Apply for a loan.
Raise capital by asking friends and family.
Find an angel investor.
Get investment from venture capitalists.
Get the capital you need to drive forward.

12-11-2019, 01:30 AM
You can get in touch with a business consultant who can help with this. Usually they have a great network with banks and investors. The one which I know is https://nrdoshi.ae/.

12-20-2019, 09:47 AM
I think a big part of that is also how much funding you're looking to bring in. Depending on the amount, you might not be (or might be) putting out an opportunity that simply might not catch the eye of what would be quality investors. As always, you'll want to take a look at cash flow against NPV and future potential when considering which route to go.

On another note, I'm actually looking to raise funds, myself. I've been getting a lot of ads served to me by this company called Anyvestor. Has anyone else had any experiences with them?


12-24-2019, 12:18 PM
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