Money-Options for a Growing Business

Money-Options for a Growing Business

Your business is growing and you need money to expand.  What money-options do you have for your growing company?  What are the best immediate money-options?  And, what are the best long-term money-options?

We will discuss these questions and other things in this article.

Control -investors

Money tied up

 

Money-Options

Well, there are several ways to get financing for the business.  Most of them we know.

Bank or SBA Loans

You can get a loan from a local or national bank.  You can get a credit line from your bank.  You can also get an SBA loan from the government.  These are all debt instruments; money you need to pay back with interest.

Grants

You can also get a grant.  There are several resources available to obtain grant monies.  Most of them require an application and reason(s) for your request for grant money.  If you get a grant, it typically is “free” money; you won’t owe it back.

Here are a few links for FREE MONEY!

NCIDEA.ORG

$50K Seed Grant Application
Opens August 20th

Caleb Brown Community Business Grant Program

Grant Amount: Up to $12,000 

HP LIFE Grant Program

Grant Amount: Varies

Investors

But, what about investors?  Let’s look at a non-traditional way of getting financing.

Have you ever watched “The Shark Tank?”  Of course, you have.  Companies give an elevator speech to the sharks and then the sharks decide whether they are going to fund that company.  If they like what they see, the Sharks invest.

If an investor likes your company, they will put money into your business.

The money that an investor puts into your company can be either debt or equity, or a combination of the two.  If it’s debt, then your company will owe it back plus interest.  But, if it’s equity, then your company will not owe the money back.

What is the best money-option for your business?

It depends.

Debt carries an obligation to repay the monies back plus interest.  The good part about debt is you usually keep 100% of your business; so, you don’t lose any equity, or control of your business.  But, most debt can be paid back under 5 years, and so this would be a good short term money-option.

Equity traditionally does not carry an obligation to repay.  The bad part for the company is you lose part of your business and dilute the other shareholders in the company.  But, most equity investors are in your business for the ride, so this would be a good long term money-option.

Then, there are hybrids.  Securities that look like debt but are in actuality, equity.

This type of investment typically comes in the form of preferred shares.  Preferred shares are wonderful for all parties involved.  The company’s financial statements look better because preferred stock is not a debt, and a dividend is typically attached to the preferred shares, so the investor will be getting some type of interest on their money.

 

Organic Growth

It’s always a good idea to try and grow your business organically, meaning, from the inside out, from the revenues it generates, rather than from a bank or an investor.

In the long run, if a company can grow organically, nine times out of ten, it will be able to keep 100% of the company.

In the End

All in all, money is available; it just transfers hands, from one person or entity to another.  No one really owns it.  We certainly don’t die with it.

Money arm wretle

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BizandTravelBlog.com is published by Virginia K. Sourlis, an attorney licensed in the state of New Jersey. This site does not provide legal advice and it does not create an attorney-client relationship with anyone. This should not be considered legal advice. You should seek an attorney for your own situation. This website is for informational purposes only. Any and all views and opinions expressed on this site are solely those of the author and do not reflect the views of Virginia’s law firm. BizandTravelBlog.com is not associated with any organization, group or institution, unless otherwise specifically noted.
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