DEBT CAPITAL SOURCES
Banks:
Banks are generally the best source to approach for all types of loans for the following reasons:
- Banks usually charge lower interest rates than a finance company.
- The banker is in the business of dealing with the finances of other businesses, and can give the applicant expert business and financial guidance.
- The bank relationship will help establish a good basis for credit references.
- The bank can give you access to all forms of loans,
Private financial institutions:
These sources are more likely to be in a position to help the smaller businessman because they will make loans more readily to so-called risky businesses such as new enterprises. When your business is new or your credit not exactly first rate, a private financial institution may take a chance on you when a bank will not.
Government financing:
What is the advantage of government financing? The primary advantages are better terms, lower interest rates, and lower equity requirements. These can be extremely important advantages. The disadvantages include special criteria that must be met before the loan can be considered, and the fact that the loan proposal is usually more detailed and difficult to put together.
