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Things to Consider Before Getting Capital Injection

The term capital injection refers to a kind of investment to fund a company or an institution in the form of debts, equity, or cash. While the term has always been associated with money as an asset, this definition is not entirely true as there are other options to invest. Private sectors, for instance, usually receive the capital from external parties in exchange for an equity stake, and those parties offering the fund will eventually receive a portion of the company’s ownership. The same case also applies to those governmental institutions receiving funds from the government.

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As this phenomenon is becoming prevalent these days, banks or credit agencies providing the loan service, such as the one offered at, are gaining even more popularities compared to decades ago where there was less chance to start a business. Of course, with all those easy requirements and a minimum asset to pledge as collateral, this sector has succeeded in helping many struggling companies to stabilize their way. If you happen to be in one of these situations, thus, below are several things to think about before you decide to get the funds.

The Investors

a person giving loan approvalThe question asking about the potential investors is the first and the most important thing to ask yourself and to the board of shareholders in your company. Whether it is a governmental institution, companies, or external private parties going for an equity stake, it is recommended that you make several inquiries about what those investors offer in exchange. If they offer the company an injection in the form of cash, it is an obvious hint that the money that your company receives will be treated as debts instead of funds. Then, the next inquiries may include the technical parts and procedures of repaying the loans.

Things will be different, of course, if the investors offer a shareholding agreement in exchange for the fund that your company needs. Then, it is vital to make sure all the shareholders agree on this big decision to avoid any legal backlash that may issue more problems in the future.

Capital Measurements

This subject is especially suitable for those companies receiving a considerable amount of money from several parties which demand the company to repay the debts during a specified period. The capital measurements include measuring the company’s asset and cash flow to make sure the company can pay the loan before the due date that both parties agree. One thing you need to know about this method is that it does not include stocks acquisition in exchange for the capital.