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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.
External financing ensures that your internal resources are untouched. Therefore, you can use these financial resources for any other purpose in the business. There are a lot of expenses in business, and if you can get a chance to acquire external sources, it is the way to go so that your internal sources are set aside for paying vendors. This helps you to improve the credit rating of the company.
In some instances, a company may fail to meet the demands of its customers due to less production. The firm may fail to have resources to increase their manufacturing. With the extra cash from outside sources, additional equipment could be purchased for the growth and success of the business. The money can also be used to increase the salary of workers to motivate them or form marketing to acquire extra customers.
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.
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.
Loan lenders and investors give out money expecting to be given back the cash with interest. Some of the lenders set high-interest rates that make it highly expensive to pay it back. Accepting these funds may prove to be a burden you did not account for.
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.
Some of these finance solutions might require you to give out collateral from your business. It typically includes assets such as machinery, vehicles, land, equipment, or property. Although this gives the lender confidence, it leaves your properties at the danger of repossession in case your company defaults on loan.
External financing ensures that your internal resources are untouched. Therefore, you can use these financial resources for any other purpose in the business. There are a lot of expenses in business, and if you can get a chance to acquire external sources, it is the way to go so that your internal sources are set aside for paying vendors. This helps you to improve the credit rating of the company.
In some instances, a company may fail to meet the demands of its customers due to less production. The firm may fail to have resources to increase their manufacturing. With the extra cash from outside sources, additional equipment could be purchased for the growth and success of the business. The money can also be used to increase the salary of workers to motivate them or form marketing to acquire extra customers.
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.
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.
Loan lenders and investors give out money expecting to be given back the cash with interest. Some of the lenders set high-interest rates that make it highly expensive to pay it back. Accepting these funds may prove to be a burden you did not account for.
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.
Some of these finance solutions might require you to give out collateral from your business. It typically includes assets such as machinery, vehicles, land, equipment, or property. Although this gives the lender confidence, it leaves your properties at the danger of repossession in case your company defaults on loan.
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Discover the benefits of project funding in Kenya with the help of this informative site. Gain full access to our homepage when you click on this link http://www.aayinvestmentsgroup.com.
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