Business financing typically involves either debt financing or equity financing, or a combination of both.
Debt financing may involve immediate periodic repayment obligations with interest, personal guaranties and the pledge of collateral as security. The lender may impose other obligations on your company to try to avoid default, and can foreclose on collateral in the event of default. However, debt financing usually does not affect the management of your company, the interest may be tax deductible, and the total cost of the debt can be readily determined for budgeting purposes.
Equity financing takes a long-term view on the investment in your company. It usually does not require immediate repayment obligations or any obligations if the business should fail. However, equity financing usually involves higher rates of return for the investor, and will require giving up a portion of the ownership and control/management of your company. An investor’s interest in your company could potentially be permanent with uncapped returns based on their portion of ownership.
For your business, Jack can advise you regarding the types of financing available, and prepare, review and/or negotiate the documents related to the following types of financing:
- Bank Loans – Unsecured, secured and personal guaranties
- Factoring – Selling your accounts receivable
- Vendor Financing and Equipment Leasing – Using credit to obtain equipment
- Sale Leaseback – Converting an asset to cash but retaining the right to use it
- Small Business Administration (SBA) Loans – For qualified applicants
- Peer to Peer Lending – Loans obtained via a web based where lenders bid in a reverse auction among others
- Friends and Family Offerings
- Angel Investors
- Convertible Promissory Notes – Debt that converts to equity
- S.A.F.E. – Simple Agreement for Future Equity
- Equity Crowdfunding
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