Searching for Funding Opportunities

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Funding Opportunities

Priority	Funding Option	Debt or Equity	Type	Maximum Available $ Amount	Interest Rate	Company Share	Terms	Documents to prepare	Contact Information	Notes
1	Personal savings	Debt		$6000	0%	I retain 100%	I Will repay myself in 18-20 months	No
2	Borrowing from relatives/friends	Debt	Parents	$15,000 – $20,000	0%	I retain 100%	Will repay in 2.5 -3 years	No
			Cousin	$8,000 – $12,000	0%	I retain 100%	Will repay in 2 years	No
			Friends	~10,000	0%	I retain 100%	Agree to repay in 18 months	No
7	Use credit card	Debt	Either personal/business	$20,000 – $30,000	13%-23%	I retain 100%	Need to make monthly payments	No		Business credit cards are probably, more preferable if they provide additional opportunities such as increased cash backs and special offers for traveling.
6	Bank loan	Debt		Up to $100,000	4%-20%	I retain 100%	Up to 7 years	Personal and business record of credit score. A detailed business plan. Personal guarantee (asset-backed loans).		As I have a good credit score, I expect to pay the lower interest rate
5	Small Business Administration (SBA) loan	Debt	7(a) loan	$5 million	5.5% – 8%	I retain 100%	Up to 7 years for working capital. Up to 10 years for equipment and business acquisition	Personal background statement and resume. Personal and business record of credit score. Business plan. Other legal documents.
			Express loan	$350,000	7.75% – 11.25%	I retain 100%	Up to 10 years
			Microloan	$50,000	6%-9%	I retain 100%	Up to 6 years
			CDC/504 loan	No maximum	2.4% – 4%	I retain 100%	Up to 10 years on equipment. Up to 25 years on real estate.			It can be used only for purchasing large equipment/machinery and commercial real estate (Strauss, 2021).
8	Venture capitalists	Equity		No maximum	0%	I retain 75%	~25% of ownership equity in exchange for investments.	Detailed business and financial plans.
9	Angel investors	Equity		No maximum	0%	I retain 75%	~25% of ownership equity in exchange for investments.	Detailed business and financial plans.
4	Crowdfunding	Debt/Equity	Reward-based	No maximum	0%	I retain 100%	Request the funding until December 25, 2021. Pay the service fee after the full amount of money is collected. Provide free company merchandise for those who invested more than $200, plus premium discount cards. Provide good discounts for those who invested less than $200.	Business plan. Visual or audial project presentation.	Website.
3			Security-based	No maximum	0%	I retain 85%	Request the funding until December 25, 2021. Pay the service fee after the full amount of money is collected. Give 15% of the company’s share to the investors proportionally to the number of investments;	Business plan. Visual or audial project presentation.	Website.

Funding Priority and Potential Legal Issues

The first two priority methods of raising funds are using personal savings and borrowing money from my parents. However, I will not invest all the money I have in the business and keep $1500 savings for personal expenses. That is needed to avoid mixing personal and business accounts, which may lead to certain legal problems. For instance, if I register the business as a limited liability company, then such comingling of assets can lead to the loss of limited liability title (Forbes Finance Council, 2020). Therefore, it is important to separate personal and business finances.

The second preferred method of business funding is reward-based crowdfunding which is also associated with certain potential legal. Firstly, by agreeing to raise funds through one of the crowdfunding platforms, the business owner establishes the contract with the sponsors. Hence, in case of project failure, I would be liable to return the investments not only as a business entity but also as an individual. For this reason, it is better to register a limited liability company that would protect my personal assets (Corporate Finance Institute, n.d.). Moreover, when posting the information on a crowdfunding website, there is a high probability that somebody may steal my idea (Clark, 2019). Therefore, it is important to analyze whether some ideas and methods in the business plan can be registered as intellectual property.

References

Clark J. (2019). The five hidden challenges of crowdfunding. Forbes.

Corporate Finance Institute. (n.d.). Limited liability company (LLC): Combining the aspects of both partnerships and corporations.

Forbes Finance Council. (2020). 14 expert insights on mixing personal and business banking.

Strauss S. (2021). Financing options for small businesses. Bank of America. Web.