Are Angel Investors Better Than Business Loans

By Renae Walsh

It is always fascinating to see people going through the process of starting their own business. One of the most curious things is how people approach the acquisition of capital. There are many methods but one of most common ways is through something called an Angel Investor. This is not always the best way, but it is certainly an option

The term Angel Investor has always bothered me because they are not always Angels. In case you are not familiar with the term I will break it down for you. Quite simply it is a person or entity that lends money to a business for some type of return. I find it hard to believe that a real angel would do something fully expecting something in return but this is the term in business lingo. There may be Angel Investors out there giving away free money but I seriously doubt it.

Let us go ahead and assume that anyone you come across who is an Angel Investor is looking to make their money work for them to some degree. Some will have reason to believe that your venture is a valuable service and just want their money to go to a good cause and earn a little profit, and there are others who see you as an opportunity to strike it. The latter may prove to cancel out all the reasons you wanted to start your own business in the first place so make sure you understand your investor’s motives.

When entering the world of Angel Investors you will run into several types and they can be lumped into a few categories. I like the dogooder angel. This is someone who just likes to see others do well in small business and will invest in a person they believe in. There is the tech angel who loves the idea of backing a new technology and being associated with its success. The Lender Angel is someone who will invest and try to spread the word in hopes of attracting other investors. Then there is the Silent Angel and these are the best. They will invest and pretty much leave you to run your business without poking around. Last, is the dark angel and believe me they are no angels. These are people who have their own agendas and your success is not always part of their plan.

Starting a business can be an awesome adventure but choosing how to capitalize shouldn’t be taken lightly. My view is that the more you give up, the less control you will have over the future of your business. If possible I always like to get business loans. If you have decent personal credit you will be surprised how many options you will have with different types of loan programs.

It is very possible to get an unsecured business loan in today’s economic climate so at least look into them. Not only can you get a loan with your personal credit, you will help establish your business credit history which in turn will open up financial doors in the future. For me, it is the best alternative to giving up control of your business to investors.

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Tags: banking, Business, business finance, business loans, Finance, Loans, money

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