Non-Traditional Debt Financing For Start-Up Companies

Start-up companies in need of cash to get their business off the ground can look to raise money either through the issuance of equity or debt. Raising money by issuing preferred equity can be costly to the founding equity owners of a start-up, both in terms of the expense of negotiating and documenting the transaction and the eventual dilution of the founding owners’ equity interests. Preferred equity investors also typically require that founding owners relinquish some level of control of the business in exchange for their investment. On the other hand, early and mid-stage start-up companies often find it difficult to obtain traditional debt financing because they lack some or all of the attributes that most lenders require in order to make such financing available, including a proven track record of profitability and management of expenses, steady cash flow and accounts receivable, solid financials and valuable business assets available to serve as collateral.  Non Traditional Financing for Startups – Part 1

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