Capital investments are made by a business for the following three main purposes
To gain more amounts of capital assets for its growth and expansion, increase the production per unit in the business, add value and build a new product.
Replace any old assets that no longer have high work efficiency. Computers and laptops, heavy-duty vehicles, delivery vehicles and much more are few examples of such assets.
To increase efficiency, the use of new technology and advanced machinery is implemented. This also reduces the cost of production.
The condition of the economy is measured with the help of capital investment hence making it an important factor. When an organization makes capital investments it is apparent that they are interested in growing and spreading their business and are confident about the outcome of the future. This also proves that the businesses are interested in improving the capacity of production. On contrary to this situation business which faces recessions generally reduce the amount of capital investment.
Entering an ondeck capital -intensive industry is a challenging and quite a difficult job as this process requires a huge amount of capital right at the beginning. A person might have a great business plan or an idea of business still getting the financial backing is tough. Ondeck financing Canada though differs from business to business thus depending on its types. To understand this one can go through this small example where a builder gets finance from the bank for building a project while a person who wants to open a restaurant of his or her own finds it difficult to get the ondeck loans from the same bank. Thus it is likely that bank thinks the building of a housing project is a more appealing work than building a restaurant. In the latter case, the person needs to find an investor who can finance the business.