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 0 X% NATURE OF CAPITAL DEBT INVESTMENT YOUR 2 CENTS SKIN NO SKIN TAX & OTHER BENEFITS YES NO DISADVANTAGES - TAX WRITE OFF Y N (CONSULT CPA) - PERSONAL GUARANTY Y N APPROVAL/DECLINE LENDER QUALIFY INVESTOR DECISION - THIS IS THE ONLY POINT OF SIMILARITY - COMMON DENOM IS THE BUSINESS / APPLICANT

GENERAL / TRADITIONAL DEBT –vs- EQUITY FINANCING ITEM DEBT EQUJTY 1 ST PAID BACK IN Y N, LAST CASE OF DISSOLUTION 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 DOES NOT EXIST - GOVERNED BY USERY - GIVEN AS AMOUNT LAWS 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 BIZ2CREDIT, KABBAGE, ETC.... 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