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Banks are not supposed to invest in businesses, and are strictly limited in this respect by federal banking laws. The government prevents banks from investment in businesses because society, in general, doesn’t want banks taking savings from depositors and investing in risky business ventures; obviously, when (and if) those business ventures fail, bank depositors’ money is at risk. Bank and commercial affiliations would undermine this strength, and enable huge conglomerates to dominate the American economy. Banks seldom finance companies in the Rebar industry. And before they finance a company, they need to see a detailed business plan, three years worth of company financials and owners with good personal credit.

Banks give loans on the basis of the potentiality of your business, its estimated cash flows, earnings, assets, etc. The main advantage of this source is the leverage these loans provide in your investment.

Loans to support your working capital needs are different from financing a real estate investment. Loans can be rejected at any stage before reaching the Credit Committee.

Debt financing is only available to business owners who have something of value that the lender can instantly liquidate. The debt finance company is not interested in becoming a partner in your endeavor, instead they are in business to make money from their money, letting you use it for periods of time. Debt financing may be short-term (repaid in full in less than one year) or long-term (repaid in full in more than one year). The lender derives no ownership interest in the business and the business has no other obligations except full repayment of the loan when due and if funds are available.

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