Client needs ideas for funding project

jimnewman75

We have a client who is in the business of acquiring raw materials, refining, and shipping finished products on a large scale to corporate customers (hardware such as door handles and other products).  They`ve grown to the point where they need to expand, which would require the purchase of a warehouse.  The company is cash strapped at the moment and does not have the resources to fund the expansion stage (which they`ve ballparked around $500,000).
The business is nearly one year old.
What options do they have?

robertj

We have a client who is in the business of acquiring raw materials, refining, and shipping finished products on a large scale to corporate customers (hardware such as door handles and other products).  They`ve grown to the point where they need to expand, which would require the purchase of a warehouse.  The company is cash strapped at the moment and does not have the resources to fund the expansion stage (which they`ve ballparked around $500,000).
The business is nearly one year old.What options do they have?

There are several possible approaches to acquiring expansion capital - depending upon the specific situation. 
Send me a PM if you want to discuss specifics.
 

zbizness

It sounds like they are a perfect candidate for either a Private Placement Memorandum (PPM) or a Private Placement Offering (PPO). The correct one to use depends on what type of entity they are. If you`re not familiar with either, they are basically a document that allows the company to solicit investment from private investors. I am involved in both writing them and getting them funded. Anyway, as long as you are raising under $1 million (which it sounds like they are) then there is a certain exemption that can be used that allows the PPM or PPO to solicit to both out of state and unaccredited investors - which is huge. You obviously have to give up some of your business to do this...how much depends on how you structure it. When I provide this service, I get the client as much capital as possible while selling the least possible amount to investors (it still has to be a fair deal for the investors or the money won`t get raised). The company doesn`t have to give up any management control as the investors are passive and don`t have anything to do with the actual business. I don`t think it`s a big issue that the company is barely a year old, it could actually be used as an advantage that they have done so well in their first year. Let me know if you`re interested in this concept. It`s what I do.


paul@zaocore.com

zbizness3/19/2008 1:31 PM