You can also take on equity partners with an eventuality of paying them out. So they get shares of the company, they get a dividend return, a return on their capital and a final return of the capital in one, two or however many years. Occasionally a royalty or continued dividend might follow for longer. But it's normal to pay investors out and retain your shares. If you fail along the way, they take over.
I'm a total amateur at this but I've dabbled in business lending for two years. I've looked at a bunch of businesses, funded four of them. Two have been very successful. One is plodding along. One totally failed. The rest quite honestly didn't need the money. Sometimes a cash infusion is the worst thing for a starting company.
What I've noticed is that the person/people involved are the most important factor and sadly the last thing most banks look at. The business that failed was the one I thought couldn't lose. But it was helmed by a barely functioning group of nitwits. The successful ones were managed by smart, experienced, humble, confident, and most importantly, generous people....people who are actually more interested in winning the game than in becoming millionaires and buying yachts. Money needs to be secondary to a commitment to business practices that work. Ironically, they are now the ones with the most money.
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