Raise from $25,000 to $2million or more in debt funding!
Vendor Finance through the issue of a single Bond
Vendor finance is often used when a business or other high-value asset such as a car, boat or even consulting or other service, is being sold but the purchaser due to a lack of sufficient collateral security is unable to obtain the total amount of funds required to settle the transaction. In that case, the Vendor may agree to issue a Vendor Bond to finance the deal.
Selling a business? Be your own Bank!
If you’re selling a business, issuing a single Vendor Bond can provide a way to vendor finance the transaction. Vendor finance may be appropriate when, for example, the purchaser is having problems getting a bank to finance the purchase of a business. This type of funding might help the vendor of a business lock in a sale at a better price.
A Vendor Bond provides an easy way to quickly set up vendor finance & repayment terms, making your business, or anything else you might be selling, more affordable to potential buyers.
For Business Funding: You can also issue a ‘series’ of SME Bonds to raise up to $2million or more in debt funding for business development or expansion!
Issuing a series of Bonds for Business development & Real Estate projects
Bonds can be used as a source of debt funding for small-scale property development & for small to medium sized enterprises from startups & early-stage, to the more established businesses. A Bond serves as an IOU between the issuer & the investor, providing a way to finance businesses beyond their normal cash flow. See Bond Example – Click to enlarge.
A Bond issuer may call the Bonds, SME Bonds; Development Bonds; Property Bonds; Vendor Bonds or any other name that best suits the purpose of the Bond issue.
Issuing a series (or set) of Bonds can provide a way for property developers, or established businesses with strong cash flow, to raise debt funding. Bonds provide a way to raise funds without watering down existing stakeholders.
Investors receive regular interest payments until the end of the bond term and receive their initial investment back at the end as well.
Investor risk warning: Bonds are not without risk to your capital. Interest payments and forward looking financial projections are not guaranteed.
Debt/Equity Hybrid Funding for Startups or Early-stage Businesses!
Bonds can be issued to fund real estate development, or as a prelude to raising equity capital by issuing shares in your business. Bonds are structured as hybrid debt/equity instruments to provide a simple and cost-effective way for a startup or early-stage business to source the initial funding needed to cover off the expenses involved in an equity capital raising exercise.
Convertible Bonds: These are Bonds that are convertible into equity securities at the discretion of the investors. Since the Bonds act as a debt instrument prior to conversion to equity, they can include an interest rate. However instead of paying out cash the Issuer will pay the investor(s) in shares, or real estate bricks & mortar, when the debt is converted.
The advantage of issuing convertible bonds is that, if the bonds are converted into shares, the company’s debt vanishes. However, in exchange for the benefit of reduced interest and principal repayment, the value of shareholder’s equity is reduced due to the watering down or stock dilution expected when bondholders convert their bonds into equity shares.
Like any typical bond, convertible bonds have an issue size ($ amount), issue date, maturity date, face value and a coupon (interest) rate.
Get started raising funds for your business today!
Issuing Convertible Bonds as a precursor to Raising Equity Funding
Convertible Bonds can be issued as a precursor to an equity-based crowdfunding exercise. Equity funding is contributed in return for a share of ownership. It’s not repayable, demands no provision of security (other than the issued shares) and bears no interest.
In order to cover legals, investment offer document preparation, crowdfunding platform listing fees, etc, you might first consider issuing a hybrid SME Bond, or a series of hybrid SME Bonds. These hybrid SME Bonds can be converted into equity shares as the company grows.
RAISE EQUITY CAPITAL – CHOOSING THE RIGHT CROWDFUNDING PLATFORM