In case you have a business, and you intend on starting a project, you may find the need to finance it without using the money of the company. You can find external financing through acquiring bank loans, seeking private investors, or selling a few company shares. Nevertheless, before you consider such project funding in Kenya, it is imperative you understand the merits and demerits of receiving such funds entirely. Below are some of them.
Getting money from outside the business ensures that the funds belonging to the firm remain untouched. The untouched cash can be helpful in other sectors of the company. Businesses often have plenty of expenses to be taken care of. Therefore, when you acquire the opportunity to get external funds, take it. This will help you utilize the untouched funds to pay off vendors and raise the ratings of the firm.
Organizations use external sources to fund projects that they cannot support on their own. For instance, if you want to increase the manufacturing space to meet the demand of the consumers, you can look for external funds to build your extra. Furthermore, such funds can be utilized in purchasing equipment to facilitate the growth of the company and the success of the venture.
People or organizations providing the funds for your project can play a huge role in giving further advice on how your venture can become successful. For example, banks often give their lenders useful tips on how they can avoid making some costly mistakes. If your investor is technologically empowered, he or she can provide necessary assistance to incorporate technology in your business and how to go about the changes.
On the other hand, using external funding has its setbacks. For instance, the shareholders and investors financing you will require a portion of your firm in exchange for the finances. One of the agreements you will make is to allow the investor to take part in the decisions of a company. This may compromise the original vision you had for the firm.
The cash given by these lenders needs to be returned. Therefore, the money you pay back is more than the money you were given, considering you will replace it with interest. Some lenders provide their clients with high rates when it comes to interest. In the end, you accumulate a more massive debt that can turn out to be a burden to your firm.
It takes considerable time to get this cash. As such, you are supposed to find suitable sources, come up with a plan, and arrange meetings to present your ideas to them. The time taken to do all this is long, and still, you may not end up getting the results you hoped for. This has made outside sourcing of money a significant disadvantage.
Presented with several solutions to the financing, you may notice that you need collateral from your company to get the money. Collateral can be any property you own be it a vehicle, land, equipment, or a machine. This puts your valuables in the risk of being possessed by your lenders in case you fail to pay in time. You can incur high losses from this.
Getting money from outside the business ensures that the funds belonging to the firm remain untouched. The untouched cash can be helpful in other sectors of the company. Businesses often have plenty of expenses to be taken care of. Therefore, when you acquire the opportunity to get external funds, take it. This will help you utilize the untouched funds to pay off vendors and raise the ratings of the firm.
Organizations use external sources to fund projects that they cannot support on their own. For instance, if you want to increase the manufacturing space to meet the demand of the consumers, you can look for external funds to build your extra. Furthermore, such funds can be utilized in purchasing equipment to facilitate the growth of the company and the success of the venture.
People or organizations providing the funds for your project can play a huge role in giving further advice on how your venture can become successful. For example, banks often give their lenders useful tips on how they can avoid making some costly mistakes. If your investor is technologically empowered, he or she can provide necessary assistance to incorporate technology in your business and how to go about the changes.
On the other hand, using external funding has its setbacks. For instance, the shareholders and investors financing you will require a portion of your firm in exchange for the finances. One of the agreements you will make is to allow the investor to take part in the decisions of a company. This may compromise the original vision you had for the firm.
The cash given by these lenders needs to be returned. Therefore, the money you pay back is more than the money you were given, considering you will replace it with interest. Some lenders provide their clients with high rates when it comes to interest. In the end, you accumulate a more massive debt that can turn out to be a burden to your firm.
It takes considerable time to get this cash. As such, you are supposed to find suitable sources, come up with a plan, and arrange meetings to present your ideas to them. The time taken to do all this is long, and still, you may not end up getting the results you hoped for. This has made outside sourcing of money a significant disadvantage.
Presented with several solutions to the financing, you may notice that you need collateral from your company to get the money. Collateral can be any property you own be it a vehicle, land, equipment, or a machine. This puts your valuables in the risk of being possessed by your lenders in case you fail to pay in time. You can incur high losses from this.
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