When you start a business, or even if you have one now, you need financing to move forward. Of course, you need a game plan, one that has failsafes, ensuring that you will have the best possible chance of success. Without capital, it’s virtually impossible to get any business off the ground. If you think about businesses like restaurants, mechanic shop, or even a large corporation, initial capital is needed. There is also something called growth equity, a type of equity that is usually obtained through private individuals that are looking at investing into your business. This could also be obtained from a bank if you have credit that will allow you to take on this type of loan. Either way, there are many ways to obtain growth capital and to use it properly so that you can find success with your business endeavor.
How Does Growth Capital Work
This private equity investment is typically provided to mature companies. For example, a bank or lending institution will look at the success of a business based upon the accounting records that they can provide. Once they have done this, they will then consider whether or not to loan a company money, and at what interest rate it will be at. If it comes from a bank, it will typically have a much lower interest rate than you would get from a growth equity firm. However, if you are not able to get funding through a traditional lending institution, you will still want to obtain growth equity through a business that will lend the money to you at a higher interest rate.
Is This The Same As Venture Capital?
This is not the same as venture capital because venture capital is for businesses that are just starting out. People will present a business proposition to a company that has money that likes to make these types of private equity investments. When dealing with growth, this type of capital is only obtained if you can show prior success. Though there is very little difference between the two types of loans, each one is obtained at different stages of the business.
Why You Might Need To Get This Private Equity Financing
Let’s say that you have a construction business that you are trying to expand. If you cannot get the additional equipment, or hire new workers, your expansion will not occur. Although you could save your money for many years, hoping to get enough to move forward at some point in time, you can miss many windows of opportunity simply because you don’t have the capital that you need to move forward at that moment. Therefore, timing is everything when applying for a private equity loan. Just make sure that you are obtaining this for a reasonable interest rate and from a company that is reputable.
Expansion capital is something that every business will need that is thinking about becoming larger. Growth equity is obtained from many different businesses including traditional banks and private lenders. If you do have a plan of action, you can easily move forward and obtain this money with a company that is willing to invest in you. All of your plans can move forward if you do have the money to do so and that’s exactly what growth equity loans will help you achieve.