DEBT FINANCING UNDERSTANDING IT AND ITS COMPARISON TO EQUITY - - PowerPoint PPT Presentation

DEBT FINANCING

UNDERSTANDING IT AND ITS COMPARISON TO EQUITY FINANCING

MY PROGRAM

• UPTO $1M REVOLVING LINE OF CREDIT
• - INTEREST ONLY PAYMENTS MONTHLY WITH X% OF OUTSTANDING PRINCIPAL

AT SUICH TIME

• - ANNUAL REVIEW AND RENEWAL / CALL
• PRODUCT FOR LIFE
• - ONE TIME FEE TO CLIENT
• 5% -VS- OTHERS AT 10%
• - MEZANINE FINANCING
• BEST FOR COMPANIES TOO B IG TO CONTINUE BOOTSTRAPPING AND TOO

SMALL TO GO BEFORE A VC.

• FINANCIAL QUALIFICATIONS OF BUSINESS AND PERSONAL
• CASHFLOW
• DIR (DEBT TO INCOME RATIO)
• EG. 43%

GENERAL / TRADITIONAL DEBT -vs- EQUITY FINANCING

DEBT EQUITY OBLIGATION YES NO % OF CO, GIVE OUT X% NATURE OF CAPITAL DEBT INVESTMENT YOUR 2 CENTS SKIN NO SKIN TAX & OTHER BENEFITS DISADVANTAGES YES NO

• TAX WRITE OFF

(CONSULT CPA) Y N

• PERSONAL GUARANTY Y

N APPROVAL/DECLINE

• THIS IS THE ONLY

POINT OF SIMILARITY

• COMMON DENOM

IS THE BUSINESS / APPLICANT LENDER QUALIFY INVESTOR DECISION

GENERAL / TRADITIONAL DEBT –vs- EQUITY FINANCING

ITEM DEBT EQUJTY 1ST PAID BACK IN CASE OF DISSOLUTION Y N, LAST PERSONAL GUAR. Y N SKIN IN THE GAME Y N

PRIVATE MONEY DEBT

• HARD MONEY
• HIGH UNSPOKE INTEREST RATE
• REPRESENTED AS AMOUNT TO REPAY
• SHORT TERM
• ALTERNATIVE TO COMMERCIAL DEBT /

EQUITY FINANCING

COMMERCIAL DEBT

• VS-

PRIVATE / DAILY REPAY DEBT FIRMS

COMMERCIAL PRIVATE % RATE LEGAL

• GOVERNED BY USERY

LAWS DOES NOT EXIST

• GIVEN AS AMOUNT

YOU MUST REPAY DAILY. ENTITY VESTING BANK WANNA BE BANKS

• PRIVATE FIRMS

GOVERNED BY THE LAW Y Y, WITH LOOPHOLES EXAMPLES B OF A, WFB, UNION, US ETC.... BIZ2CREDIT, KABBAGE, ABOVE DECK PERSONAL GUARANTY? Y Y

BUSINESS LOC –vs- HOME EQUITY LOC

ITEM BUSINESS LOC HOME EQUITY LOC SECURED? N Y TERM / MATURTY N Y DRAW / REPAY PERIOD? N Y SIMILARITY INTEREST RATE INTEREST RATE