Would you prefer getting a loan for a startup or getting an investor?

[Hewlet]

  The compromise might be what Facebook did which is voting rights are not granted with shares equally, even if people currently disagree with Zuckerburg he can overrule them with a majority of voting rights in the company.  Capital wise he owns like 40% I think I read maybe less but he retains control regardless which is quite a privilege with a public company.

The clause most investors gives before investing in your idea always and almost look like they are going to be the one to benefit from the company in the long run more than you would. Certainly, some won't just come in to invest but will also offer certain level of leverage which you will need at the early phase of your business but in all, investors don't just push in Thier funds into what doesn't profit them well which is the reason why they don't play with numbers when they are trying to understand how your idea or business is already doing before they step into the picture.

If I have enough collateral, I will go for a loan. The only challenge is that it's going to put pressure on me to pay back to soon but if there's provision for part payment that's last a particular year, it's actually better so I gain full control of my business.

[allthebitandbobs]

I don't really know if there's much difference between them because an investor is also borrowing you the money so I don't think they are mutually exclusive. Let's say you borrow a loan from an organization, they would require a certain amount of interest over a period of time and they wouldn't have the patience to wait for you to start making profit from your investment because they are also running a business. But if you get an investor the person would be able to wait till you start making profits from your business. But it's all risky so you must be very sure of what you are doing.

The difference is already stated there by you. It was the ''Interest'' part. It is a big thing already though, especially if the amounts we are dealing are also huge. Based on your comparison right there, it is may seem clear already that getting an investor is a better option and may not even have a risk at all. If there would be a risk here, then that is already on their part.

Of course, I am not too evil to think of scamming them lol. But maybe the true risk on here is if we properly register our start up project and then we signed a couple of documents. If things go south, we can get sued by the regulators. The investors of us can also easily locate us and they can as well sue us. To be registered is a must though, as it gives investors a sense of assurance or trust.

[bhadz]

If I have enough collateral, I will go for a loan. The only challenge is that it's going to put pressure on me to pay back to soon but if there's provision for part payment that's last a particular year, it's actually better so I gain full control of my business.

But that's also light there even if you take a loan because you have a collateral. Unless that collateral is very important to you, you'll definitely have to take the pressure, pay the interest and loan so you can take back that collateral if it's very important to you. I've known entrepreneurs that did that, it's all what they have and that's why they took a gamble by either selling what they have to sell, and also take a loan against their properties and other assets. It is only ourselves that sees the vision and potential of what we're doing and no one will believe in us in the first trials.

[Muba20]

If I have enough collateral, I will go for a loan. The only challenge is that it's going to put pressure on me to pay back to soon but if there's provision for part payment that's last a particular year, it's actually better so I gain full control of my business.

But that's also light there even if you take a loan because you have a collateral. Unless that collateral is very important to you, you'll definitely have to take the pressure, pay the interest and loan so you can take back that collateral if it's very important to you. I've known entrepreneurs that did that, it's all what they have and that's why they took a gamble by either selling what they have to sell, and also take a loan against their properties and other assets. It is only ourselves that sees the vision and potential of what we're doing and no one will believe in us in the first trials.

There are some people who want to do something to change their financial situation but their biggest problem is that they do not want to take risks. Surely those investors will not be able to change their situation much. There are many investors who do not have money of their own but are ready to take risks and do not even hesitate to take loans against their assets. In my case, I think that if I have assets, I will start a business with those assets and if that is not possible then I will definitely try to take a loan. I must accept any one of them. If someone has any alternative option then he can accept it as he wishes but if not then I think taking a loan is definitely a good decision but of course one should review it well before taking a loan.

[eightdots]

If I have enough collateral, I will go for a loan. The only challenge is that it's going to put pressure on me to pay back to soon but if there's provision for part payment that's last a particular year, it's actually better so I gain full control of my business.

But that's also light there even if you take a loan because you have a collateral. Unless that collateral is very important to you, you'll definitely have to take the pressure, pay the interest and loan so you can take back that collateral if it's very important to you. I've known entrepreneurs that did that, it's all what they have and that's why they took a gamble by either selling what they have to sell, and also take a loan against their properties and other assets. It is only ourselves that sees the vision and potential of what we're doing and no one will believe in us in the first trials.

There are some people who want to do something to change their financial situation but their biggest problem is that they do not want to take risks. Surely those investors will not be able to change their situation much. There are many investors who do not have money of their own but are ready to take risks and do not even hesitate to take loans against their assets. In my case, I think that if I have assets, I will start a business with those assets and if that is not possible then I will definitely try to take a loan. I must accept any one of them. If someone has any alternative option then he can accept it as he wishes but if not then I think taking a loan is definitely a good decision but of course one should review it well before taking a loan.

Taking risks may be necessary in some situations, but first, you need to work on minimizing those risks. People who can take out loans and plan their repayment can take risks because they have a planned approach. If you have the chance to start a business without taking out a loan, you can consider it, but whether you take out a loan or not, the first thing you need to do is thorough research.

The important thing is to be able to make a profit after starting your business and to ensure the continuity of that profit. Those who want to start a business need to have a good plan and thorough research.

[Versatile_choice]

The important thing is to be able to make a profit after starting your business and to ensure the continuity of that profit. Those who want to start a business need to have a good plan and thorough research.

Yes plan is the first thing, because I have seen alot of people entering into business but within a short period you will see their business folding instead of increasing the more and that's simply because they don't plan themselves very well. There are some especially those that sells provision taking food stuffs from thier shop without even recording or pay for it, this doesn't happen once I see them doing that more often. This is really affecting alot of people in thier business that is why we need reserve funds or back up funds while running a business so that to avoid tempering our investment or business when we are in need of something.

[Onyeeze]

The important thing is to be able to make a profit after starting your business and to ensure the continuity of that profit. Those who want to start a business need to have a good plan and thorough research.

Yes plan is the first thing, because I have seen alot of people entering into business but within a short period you will see their business folding instead of increasing the more and that's simply because they don't plan themselves very well. There are some especially those that sells provision taking food stuffs from thier shop without even recording or pay for it, this doesn't happen once I see them doing that more often. This is really affecting alot of people in thier business that is why we need reserve funds or back up funds while running a business so that to avoid tempering our investment or business when we are in need of something.

why some people the business does not increase instead of that that business continue to decrease it it is because they have not done what we call a market survey and environmental survey, before then go into such business, if you want to invest or if you want to establish a business you will consider the facilities around the place and competitors in that environment and also consider the population size of the place before us publish a business for a business to flourish the population size need to be okay and the environment need to be accessible and also you have to bring the news and choice on Facebook who is living in that environment without that you have business will crash

[Samlucky O]

As someone who wants to start up something, I will never think it twice to get a loan, because, doing that is the beginning of the down fall of the business. When you want to start up a business, don't ever think of building or starting it on loan, because you will never make it easily and as time goes on you will be frustrated at the end. And also, thinking of getting an investor at this early stage of business is a very bad idea because it will make you to spend the money you don't plan to spend.

So, as one who wants to start up something like a business, I will advise you first of have a plan by drafting out what and what will be using for a start, and you have to start saving towards it and give yourself a particular period of time you have to save up.

Thats actually true, taking loan to start a business is completely out of the sketch, when an investor want to start a business he should start with the little he has to build the business until it becomes strong enough to withstand any situation or pressure.. later it can be increased gradually untill it stand firm. I could remember a Guy who took loan to invest, but unfortunately it didn't work out as planned due to unforseen circumstances, he was owing dept here and there, to the extent he find it difficult to feed . Be had to quit the business to be able to pay off his loan , but the funny thing was that even after quitting his business he was still owing loan.

[slapper]

I would say that if someone is able to start a business with his own money, it is better. If an investor thinks that it is not possible to start the business he wants to start with the money he has, but that business is definitely profitable for him.

Honestly it’s just better you start your business with your money, I don’t always buy the idea of taking a loan to start a new business, so seeking for investors. As a new business owner, you can just start small, then grow your business, instead of you trying to take loan or requesting for investors just because you want to start big.

It’s so risky to start a business with loan money, before you start the business, you might be thinking everything is going to be fine, you will have properly strategize everything, and you will be so confident that everything is going to be fine, but immediately you start the business, you going to start facing some challenges which you never expected, and things might not really go as planned.

If you request for loan, there will be interest which mostly it’s always high, and their will be repayment period, as a new business owner that will be a great problem, which you might not be able to meet up with the repayment period, and the interest and it’s going to affect you. It’s not proper to even take a loan for a business which you are not sure how successful it’s going to be.

Taking on debt for something you haven't tested yet is a bad bet. To start small is to see others move quicker. That means reminding yourself that the long game is important. Means working at a level that makes others look at you like “what do you do?”. And most people break under that pressure. So they head off to get the loan anyway.

There is also a market timing aspect in which some sectors are truly "punishing the slow guys. Where network effects or first-mover advantage play a role, organic growth may be a growth into irrelevance. Not all businesses, of course. But some.

What I would add is that it's not a financial decision as a whole to choose either loan, or investor, or bootstrapping. Below all of that is your selection of the type of pressure you can withstand. Debt pressure. Equity pressure. Patience pressure. All of them have different effects on people. And if you aren't sure which pressure you take best, bootstrapping is the safest bet, since any failure is private and any lessons are yours.

[uneng]

Loans are a trap. The interest rates are too high, unless you have access to credit lines which are usually offered by public banks, especially to farmers. On the other hand, to find an investor willing to invest in your business isn't an easy task, but if you are able to find, that would be the preferable alternative in this case.

You just have to be attentive to the terms involved. How much profit you will have to share, for how long at least, what are the risks implied and how long you will have until being necessary to start sharing dividends.

[LogitechMouse]

Loans are a trap. The interest rates are too high, unless you have access to credit lines which are usually offered by public banks, especially to farmers. On the other hand, to find an investor willing to invest in your business isn't an easy task, but if you are able to find, that would be the preferable alternative in this case.

You just have to be attentive to the terms involved. How much profit you will have to share, for how long at least, what are the risks implied and how long you will have until being necessary to start sharing dividends.

Loan isn't a trap, and that's why you need to have some information with regards to the interest rates before asking for a loan.

Just look at Robert Kiyosaki. He has billions of dollars in debt, but he's still thriving. He also shared that in the 2008 Global Financial Crisis, while many are panicking out there, he took a loan and bought real estates during that time. Now he's earning 5-6 digits in passive income. That's what I mean when I say you need to have knowledge on what's happening. I know his situation isn't applicable to all, but what I'm trying to say is that, loan will only be a trap if you use it on things that you don't need or you don't use it to something that will yield you money.

Finding an investor is harder for me because you need to introduce it to them, and you will get a lot of rejections along the way. Well if you believe that your product is good enough to solve something, investors will come to you aside from the fact that you go to them. Overall, it all depends on the situation. Getting an investor and getting a loan could work for certain people.

[Fortify]

If you have a well thought out business idea but don't have the needed capital to keep it functional, is getting a loan the best option or looking for interested investors?

Would trying to start up the business in your own little way the best option or can you consider bringing a third party into the business who will just serve as a partner that contributes just money?

It really depends on what the investor can offer because a loan would almost always be better long term if you can get reasonable rates for it. An investor is going to want a slice of your company and they usually push for the maximum they can get. Having an investor can be useful if they bring other things - connections, industry knowledge, bigger exposure, extra business, etc. but they must offer something worth the slice. Ideally you can steer your own business and know what it needs to grow with the money from a loan, but some markets can simply be difficult to break into without a big name behind you. There are times when you have no choice, banks reject you as too risky and you must accept maybe unfriendly terms from an investor.

[Danica22]

Loans are a trap. The interest rates are too high, unless you have access to credit lines which are usually offered by public banks, especially to farmers. On the other hand, to find an investor willing to invest in your business isn't an easy task, but if you are able to find, that would be the preferable alternative in this case.

You just have to be attentive to the terms involved. How much profit you will have to share, for how long at least, what are the risks implied and how long you will have until being necessary to start sharing dividends.

Everything has its price. When you borrow money to start a business, you must bear all the risks yourself. You will have to pay off that debt yourself, regardless of whether the business succeeds or fail. But in return, you fully own what you build and you do not have to share the profit.

Meanwhile, raising capital can reduce your financial burden and reduce your risk to a certain extent. However, you will have to give up part of your control, accept their interference, and share the profit as the business grow.
There is no perfect solution, only trade offs, and the choice is yours.