Lyda Law Firm is built to help startups and small businesses. One of the greatest, and most complicated, opportunities for a startup is in seeking funding. We help startups with contracts, compliance, and organization while raising capital.
We can help in the following areas:
Our attorneys and resources help efficiently and effectively ensure legal compliance while also making sure that your shareholder records are easily and neatly organized. Having a strong shareholder records organization system not only helps keep you legally compliant, but also should appeal to future investors. We also can help you formalize protection for your intellectual property, which may make your business more attractive to investors.
We strive to make the process as painless and reliable as possible so that you can focus on building your business.
There are many funding options to consider when starting a business. From self-funding to venture capital and everything in between, Lyda Law Firm can help you make the best possible decisions when funding your new business.
The three main ways to fund a new business are:
You can choose one of these options or any combination of the three. Each option comes with their own unique consequences, so it’s important to take your time and talk through the decision with a trusted advisor. Let’s look at each one individually.
Self-funding is the simplest way to fund a new business. When self-funding, you don’t have to pay any interest (like you would with a loan) and you don’t have to hand over any control or ownership (like you would with outside investors).
The biggest obstacle to self-funding is, obviously, having the available capital. Another issue is that self-funding could limit how quickly you expand, which could lead to missed opportunities. If you have enough cash on hand to avoid these pitfalls, self-funding is the smoothest path forward.
The second way to fund your business is through a loan. There are several different types of loans for small businesses. The most well-known is an SBA loan, which stands for Small Business Administration loan.
If you don’t qualify for an SBA loan, there are many different types of private loans to fund your business. Since they do not have a government guarantee, they usually have higher interest rates.
The downside of any loan is that you have to pay it back (with interest). If you’re unable to pay back a loan, the lender can attempt to collect on the debt that you owe. Collection methods vary from state to state, so consult with a professional in your state and make sure you understand the consequences of delinquent payments. Also, make sure you understand who is liable to make those payments. Depending on your business entity type, your personal assets could be at stake.
The third way to fund your business is through outside investors. It’s important to make this decision early because you should consider forming your business as a subchapter C corporation if you use outside investors.
There are also a host of laws and regulations governing outside investments in your business. If you go this route, do your homework and consult with a securities lawyer licensed in your state.
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