What is the difference between a lender and an investor

What is the difference between a lender and an investor

The main difference between a lender and an investor is that a lender lends money for a business. You usually have to pay it back with interest.

An investor puts money into business projects, ideas and start-ups. He wants a share of the profits.

How investors and lenders look at a business plan

An investor and a lender differ in the way they analyse a business plan, what they look at when studying a project and their intentions.

An investor in a business plan, if any, is interested in the entrepreneur's goals, possible problems and strategies for solving them.

Lenders in a business plan are interested in the return on the business. Since they are lending, they are assessing the project's potential for repayment.

What is the difference between investors and lenders in business payback

Also a significant difference between an investor and a lender is the right to repay their 'investment' in the business with interest. Even if the business fails, this money has to be paid back. Investors are interested in growing the company and increasing sales because they want their share of the profits. They finance the project at their own risk; if the business runs at a loss, they lose money too. Investors scrutinise your financial performance and sales forecasts. They are interested in your business model and your team of specialists. Investors are usually interested in funding projects and start-ups where the founders and team have the necessary expertise or experience.

Do lenders and investors interfere in the running of the business

Lenders are not interested in getting involved in your business project, investors are; the investor is essentially your business partner. Sometimes he has a stake in the business, which gives him a voice and influence in decision-making. So choose your investor and business partner carefully so you know how they make decisions and negotiate.

Good luck!


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