BANK LOAN VS. INVESTOR FUNDING, WHICH MAKES MORE SENSE?
I’ve run into this same wall a few times—banks just don’t have much appetite for “unusual” building materials or methods. They want to see the numbers, the track record, and as little risk as possible. Investors, on the other hand, might say they’re open to innovation but usually end up pushing for what’s cheapest or fastest.
Here’s how I try to break it down:
1. With a bank loan, you keep full ownership but have to play by their rules. If your project is unconventional, that can mean endless paperwork and having to explain yourself over and over. Plus, banks don’t really care about your vision—they care about collateral and repayment.
2. Investors might “get” your idea more quickly, but their money isn’t free. You’re giving up some control (and future profits). They’ll want a say in decisions, especially if they think you’re spending extra on something they see as unnecessary.
Honestly, I lean toward bank loans if I want to keep control—even if it’s a headache up front. If you need flexibility or someone who’ll take a risk on an unproven idea, investors are probably better... but be ready for compromises. Neither is perfect; it’s just about which trade-off stings less for your project.
BANK LOAN VS. INVESTOR FUNDING, WHICH MAKES MORE SENSE?
banks just don’t have much appetite for “unusual” building materials or methods
Ain’t that the truth. I tried pitching a straw bale house to my bank once and you’d think I was asking for a loan to build a spaceship. Investors can be just as tricky though—had one guy try to talk me out of using reclaimed wood because it “looked too rustic.” At least with a bank, you know what hoops you’re jumping through. Investors can move the goalposts halfway through. Neither is a picnic, but at least the bank doesn’t want to pick out your paint colors.
BANK LOAN VS. INVESTOR FUNDING, WHICH MAKES MORE SENSE?
Had a client once who wanted to use rammed earth walls—bank just flat-out refused, didn’t even want to hear about the engineering reports. Ended up going with a private investor, but man, every week it was a new “suggestion” about finishes and layout. I get wanting to protect your investment, but sometimes it feels like you’re building their dream, not yours. At least banks are predictable in their stubbornness. Investors can be wild cards.
At least banks are predictable in their stubbornness. Investors can be wild cards.
That’s exactly it—banks might be rigid, but at least you know the hoops you’re jumping through. I once spent three months updating spreadsheets and sending soil test results to a bank, only for them to reject my solar roof idea because “nobody else on the block had one.” Ended up taking a small investor loan instead. Suddenly, every fixture choice turned into a negotiation. I’d almost rather argue with a spreadsheet than someone’s “vision board,” honestly.
It’s wild how investors can get fixated on aesthetics or trends, isn’t it? With banks, at least the requirements are spelled out, even if they’re frustrating. Investors sometimes want to “collaborate” on every detail... which can drag things out way longer than you’d expect.
