Answer to Question #274603 in Management for Feruzabonu

Question

Take an example of a startup you want to establish. What source of funding shall you opt for and why?

Answer 1

I would prefer a bank loan as a source of funding for my startup business because it entails manufacturing of products. As such, I might need more funds than I can borrow from savings and family. Moreover, since the start up requires a large initial investment to purchase equipment, a startup loan is suitable to get the needed funds. Majority of banks currently offer different advantages, such as personalized loan repayment services. This would be beneficial since it is difficult to predict sales of the new products in a market with existing competitors even when there exists a solid business plan. By funding the venture with a loan, I will have more options when considering potential partnerships. For instance, I can choose investors based on strategy, rather than monetary value. Finally, investors may have the power to make other decisions that directly affect the business, thus a bank loan would help me in maintaining control over the business.