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.
Another benefit of acquiring funds from external sources to finance a project is that you get advice from experts. The bank, in particular, has loaned numerous businesses. Hence, you get guidance on how you will use the loan and avoid pitfalls. A technologically empowered investor may as well advise you on way of incorporating advanced technology to boost your production.
Getting additional sources to provide funds has a few demerits. For example, individuals investing in your project may ask for a particular stake at your firm so that they can give you the money. In the agreement you make, the investor may want to make decisions in your business. This may significantly impact your original vision of your firm.
These funds are not given for free. The financiers will want a return on the investment. So, banks and investors add interest to the initial loan. Some of these interest rates are high such that when added to the other investment, the cost can be huge. In the end, the financing becomes a burden that you may not have planned for initially.
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.
Another benefit of acquiring funds from external sources to finance a project is that you get advice from experts. The bank, in particular, has loaned numerous businesses. Hence, you get guidance on how you will use the loan and avoid pitfalls. A technologically empowered investor may as well advise you on way of incorporating advanced technology to boost your production.
Getting additional sources to provide funds has a few demerits. For example, individuals investing in your project may ask for a particular stake at your firm so that they can give you the money. In the agreement you make, the investor may want to make decisions in your business. This may significantly impact your original vision of your firm.
These funds are not given for free. The financiers will want a return on the investment. So, banks and investors add interest to the initial loan. Some of these interest rates are high such that when added to the other investment, the cost can be huge. In the end, the financing becomes a burden that you may not have planned for initially.
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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