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Credit or private investor - financing options to establish your company

Credit or private investor

Are you an entrepreneur in the early stages or are you already generating high sales with your company? Are you striving for further development or would you like to focus more clearly on individual business areas? Perhaps you would also like to establish your company on the international market in the next few years? Large corporate goals usually require large financial resources so that they can actually be realized. There are several ways of financing, such as a loan or a private investor . But what about the advantages and disadvantages of both variants and what is the difference between investor and bank loan ? The following guide is intended to give you an overview of which form of financing is the better choice for you.

Company stagnating or growing?

As an entrepreneur, you will know which daily tasks a management team is confronted with and how it behaves with the ups and downs of a company. Depending on the order situation, supply and demand, stagnation can occur again and again. In the course of increasingly intelligent technologies and digitization, it can mean "death" for a company if these changes are not gone hand in hand. New ideas have to be developed, existing products have to be optimized and a wide variety of marketing strategies have to be pursued.

In order for you to continue to exist in the market with your company and even to expand, you need a lot of financial resources. It is good for those who are not dependent on any outside capital. The latter is rarely the case, however, so that most business financing is based on a loan or a private investor. But where is the difference between investor and bank loan?

Loan or private investor - what is the right method of financing?

If financing is required, regardless of the project, then a loan is usually the first thought and is the classic way. If you have nothing to oppose monthly fixed repayment installments over a fixed term and you have appropriate collateral for loan protection , then two essential points for the loan through a bank are already regulated. You should certainly also think at this point that if you are faced with the choice between a loan or a private investor, you will have to be financially tied to the bank for a very long period of time.

In order to be able to obtain a loan from a bank at all, various conditions must also be met. A first difference between investor and bank loan can therefore be noted here. As a rule, private investors attach completely different requirements to the granting of their financial contribution, as is the case with a classic loan from a bank.

Loan or private investor - terms and conditions of the bank

Banks look very carefully when granting their loans and credits and expect you as a borrower to meet special conditions, such as

  • Collateral
  • clean Schufa
  • corresponding creditworthiness in connection with creditworthiness

Self-employed people in particular often find it very difficult to get a loan from banks. If then there is a bad SCHUFA, it is almost impossible to get a company loan. You still have the option of applying for a loan without Schufa . However, this loan usually has worse terms for the borrower.

Loan Or Private Investor - The Difference Between Investor And Bank Loan

Private investors represent a lucrative alternative to banks in the area of ​​credit. The main difference between investor and bank credit lies in the fact that the private investor is a single private person. In the background there is no huge bank with fixed rules and non-negotiable conditions. A private investor acts exclusively in his own interest for the purpose of investing profitably and sensibly. In this day and age, with bad interest rates and strongly fluctuating bonds, more and more private individuals are looking for alternatives to investing. Capital that does not work is not profitable and therefore does not increase either. But if you have capital at your disposal, you don't want this, of course, which is why many loans now come from private investors.

With a private investor, you negotiate on a completely different basis and above all on an equal footing, which in turn is a huge difference between investor and bank loan. If you are faced with the question of a loan or a private investor, you should definitely use a pro and contra list as a guide.

Credit or private investor - advantages and disadvantages of both sides

As almost always in life, everything has its advantages and disadvantages. This of course also applies to a loan or private investor. But which alternative can score more and offer you the most advantages?

Bank loan

benefits disadvantage
optimal planning security through fixed conditions such as term and interest strict guidelines for lending
no risk of attempting to influence business decisions non-negotiable conditions
competent consultants and always available contact persons

Private investor

benefits disadvantage
Possibility of free choice of private investors Decisions must be discussed with the private investor
Possibility to negotiate the terms Risk of raising any claims
no strict acceptance guidelines Risk of problems on an interpersonal level
Business relationship on a human (personal) basis

What you should know about credit or private investors!

There are numerous opportunities for external investment in your company. Loan or private investor are only two of the various variants. Both are, however, among the most popular methods that present themselves to you as a borrower in a wide variety of ways.

My name is Martina Lange and I prefer to write journalistic texts on the topics of finance and medicine. I also love to write professional articles of all kinds. I can find my way into almost any topic and am always happy when I have even more knowledge after finishing a text. As a freelance writer, I am passionate about writing for creditSUN.