Even with a first-rate concept for a business, it would be nearly impossible to see its inception without capital. While business start-up costs are often prohibitive, one need not become discouraged about the chances of finding capital if creative avenues are explored. An Orange County business lawyer can provide guidance on how to raise needed capital.
Equity vs. Debt Financing
The traditional methods of financing a start-up involve taking out a business loan or taking on investors. Banks are often reluctant to loan money for a new enterprise, especially if the borrower has limited experience in running a business. It is generally necessary to prove through a business plan that the concept is viable, and show an understanding of how and when you will see a profit. A related problem with debt financing is that paying back the loan will eat into profits during those first crucial years.
Equity financing basically involves finding individuals to invest in the business. In return for their investment, they become co-owners and share in the future profits. The downside is that if the profit margin is slim, you will see little personal financial gain.
An Orange County business lawyer may be able to help you come up with creative ways of raising capital. The possibilities are limited only by your imagination. For instance, you may:
- · Borrow capital from a family member
- · Open a revolving line of credit
- · Take on a silent partner
- · Borrow from retirement savings
- · Borrow against other personal assets
- · Liquidate certain personal assets
For Further Information
For further information on raising capital to start a business, speak with an Orange County business lawyer. Call the Law Offices of Daily Aljian LLP for an appointment today at (949) 861-2524.