
When you first start up your business, you need money to get you off the ground. Somewhere along the way, you may need another infusion of money to get you to the next level. That’s the reality of trying to grow a company. The question, then, is where you get this money.
You could tap into your personal savings, but oftentimes you’ll be left with one of two big options: get outside investment from a venture capitalist in exchange for a percentage share in your company or approach the bank to get a loan. Not surprisingly, there are pros and cons to both approaches.
Some companies may not qualify for the bank loans that they need and they may end up on television shows like Shark Tank and Dragons’ Den. Even outside the specter of television, the cutthroat environment of venture capitalist can be very intimidating. You are also giving out a portion of your business, either in a royalty or a percentage ownership. At the same time, though, you may be gaining access to contacts and expertise that you may not have otherwise.
A business loan from the bank necessarily results in interest being accrued, so this is an additional expense that you’ll need to consider. It also means that you are still on your own, without the outside guidance that a VC may be able to provide.
In the end, neither option is really “better” than the other; it’s just a matter of which is more suitable for your particular situation.




