If you are starting a business, or already have one, and are in need of finances to run the business you have many options to choose from – and choose wisely you must. Every source of finance has its own set of pros and cons and a lot of thought must be given to the economics of the transaction. It has been said that money goes where the money is and a business with no funds to operate, expand or just meet day to day expenses will not attract any business – and will eventually down its shutters. Therefore a business manager or owner must have a guaranteed source of finance even for short-term opportunities.
The fine print
The loan contract may include business administration rights as well. Private lenders want to be in control all the time, and since they have a stake in the business as well as they will want to have veto rights in business decisions. Now, this is where the trouble begins. If the property owned by the business is prime property and the private lender has his eye on the property he may do all in his power to prevent the business from being able to repay the loan. This will force the business owner to part with the lenders share of the property, or the whole part of the property for a miserly sum.