Loan Shark vs Strategic Investor

Are you planning to start a new business and really need a loan? Can you do without it? How much do you really need? Almost everything like loan sharks and strategic investors has its pros and cons. 

In this blog, we at Nordic Intent decided to write about two very common modes of loan acquisition and how it can benefit your business or startup. 

Loan Shark

A loan shark is a person who – or is an entity that – charges borrowers interest above an established legal rate. Often loan sharks are members of organized groups offering short-term loans who may/may not use illegal methods to recover their money back, such as threats of violence for debt collection. 

More often than not, a loan shark does not belong to a personal or professional network offering to be able to provide loans for large sums of money. They may be found in under-banked neighbourhoods, on the internet or through personal networks. There is no possibility of tracking where their funds come from and are generally unregistered entities. 

However, the only upside about loan shark is that when acquiring a loan from a source like this, there is no real limit as to what amount one can borrow, without having to worry about submitting any collateral, such as homes, etc. On the other hand, when you acquire a loan from a loan shark since no collateral is exchanged, loaners may carry out some extreme illegal methods in order to gain their money back. 

Strategic Investor 

A strategic Investor, on the other hand, usually refers to a corporate investor. The aim of a strategic investor is usually to invest so they can potentially acquire the company at a later date. They watch the company’s progress by getting an “under the hood” look at the company.

While acquiring a loan from a strategic investor, one will usually have a right of notification built into their deal with the company. What this means is the company has to notify the strategic investor that another company has made an offer to buy the company, the investor can either match the buy-out or back out of the said partnership. 

Both these loan acquisition methods have their own set of pros and cons, and it’s important to invest a good amount of time before making a decision in either one. However, If you find yourself in a pickle, about the right path to grow and increase your business, we at Nordic Intent are a dedicated group of individuals specialised to help entrepreneurs and businesses start, grow and accelerate their companies. 

If you feel a need for some expert advice, do send us a message and we’ll be sure to get right back to you.