The term capital investment is a complex term that may be used to mean a variety of things. First of all, it may refer to investment funds that are used by a business to buy fixed assets like buildings, machinery and land. The term may also be used to refer to any funds that have been invested into a business with the intent of buying fixed assets and not operating the daily activities of the business.
Capital investment is a measure that is very vital for the health of the economy. When a business makes a capital investment, this means that the business is quite confident of their future and they are intent on developing their business in the long run. If capital investment are reduced, the economy may be plunged into recession.
For any business owner, it can be quite a difficult undertaking to break into a capital intensive industry. This is because it will require a lot of capital upfront. Even if you have a strong business plan and a great idea, financing a business that is capital intensive can be hard, depending on the kind of business.
For instance, if you are financing a new building especially in a strong real estate market, you may have no problem getting the capital from a bank. Such a business is quite likely to succeed and so the bank is more likely to accept a loan request. It will also be easier since a building acts as a better form of collateral as compared to other forms of business.
On the other hand, some businesses like restaurants are not as appealing to investors like banks. Such businesses have higher chances of failing and are not likely to attract many investors. An investor is willing to bet his or her money on a venture that is assured of succeeding or one that at least has a high chance of succeeding.
If you are not able to secure debt funding from a lending company. You may turn to friends and family. This may be a better alternative since it is cheaper and more convenient. The interest rates are lower and you can pay back on your own terms. In case you do not have rich friends and relatives you can always find angel investors who can provide your business with equity financing. So long as you stay vigilant and try all sides, you will get capital for your business.
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