It can your savings, your investment returns or any emergency cash reserves which can be considered as your personal money. You have earned and saved the money for over a period of time. This can be a saviour for you at any stage of your life. But, using that money for engineering business might not be a good decision.
Difficulty in increasing business credit
All businesses try to increase credit, so they must have the ability to do so. Like if you have a paper manufacturing business, later you may want to expand it to hand made papers manufacturing business. This is known as increasing business credit. But, if you finish all your personal money it will be difficult for you.
Then, if you want to apply for a loan, lenders will ask for a good credit score. You can build a good credit score by taking money from external sources and repaying it on time. At such situation, you can apply for an engineer loan, to finance the business expansion.
Difficulty in handling emergency situations
You may need some money to tackle the emergency situations. It can be a medical emergency for your family, home purchase, car purchase, where personal money or savings will be more essential and useful. If you use the savings to purchase a new machine or equipment for your business, it may not be helpful. There is no guarantee that this investment will be fruitful.
There are many other reasons that will give you a clear idea and will help you to take the right decision. To know more, read:
Also Read : Is Putting Personal Money Into Your Engineering Business The Right Step
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.