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I'll be honest, I am very concerned with this posting. You don't want a loan, and you don't want stock, you want some benevolent businessman to... Give you th

I'll be honest, I am very concerned with this posting. You don't want a loan, and you don't want stock, you want some benevolent businessman to... Give you the money? Those normally don't exist, you know. As for your business, how many consultants do you have? Are the consultants working 40 hours/week with these 3-5 clients you have? If they are, how are you having cash flow problems? If they are not, you have to focus on getting more clients before you get more contractors. You may want to expand rapidly, but you can't just throw money for more contractors and hope the clients come, because when the money runs out you'll be in the same place before, but now with a bunch of debt over your head.

cookiecaper 16y ago
It's not that I don't want to give stock, I just don't want the hassle of setting it all up. From the outset, it looks like a big PITA filled with lots of paperwork and formalities involving consultations with accountants and lawyers. That is the downside to taking private investment in exchange for stock -- a loan is a much better plotted course with far fewer legal, organizational, and financial vagaries, but a loan also seems to have a much higher personal risk. As I acknowledged in the OP, I will probably have to either go through the paperwork and get the stock all filed/configured or take out a loan from a big bank. I am merely looking for HN's advice as to whether it is better to get a loan or trade private investment for stock. I am happy to give stock or pay interest in exchange for investment. It's just all the attached overhead in one of these situations that I'd prefer to avoid. So I don't want free money, I just want money in the most expedient and least disruptive way possible.
- eggbrain 16y ago
  What about my other question, regarding how many consultants you have, and how much work they do? If you go to a bank and ask for a business loan, they are going to want to see that you have sustainable positive cash flow. If they see things like consultants not working full time, they will want the fat trimmed (lose a consultant) or meat added (more clients) before they invest money, as they want to make sure you will be able to pay off the loan.

cookiecaper 16y ago

It's not that I don't want to give stock, I just don't want the hassle of setting it all up. From the outset, it looks like a big PITA filled with lots of paperwork and formalities involving consultations with accountants and lawyers. That is the downside to taking private investment in exchange for stock -- a loan is a much better plotted course with far fewer legal, organizational, and financial vagaries, but a loan also seems to have a much higher personal risk. As I acknowledged in the OP, I will probably have to either go through the paperwork and get the stock all filed/configured or take out a loan from a big bank. I am merely looking for HN's advice as to whether it is better to get a loan or trade private investment for stock. I am happy to give stock or pay interest in exchange for investment. It's just all the attached overhead in one of these situations that I'd prefer to avoid. So I don't want free money, I just want money in the most expedient and least disruptive way possible.

eggbrain 16y ago
What about my other question, regarding how many consultants you have, and how much work they do? If you go to a bank and ask for a business loan, they are going to want to see that you have sustainable positive cash flow. If they see things like consultants not working full time, they will want the fat trimmed (lose a consultant) or meat added (more clients) before they invest money, as they want to make sure you will be able to pay off the loan.