Question

In: Finance

Businesses cost money.   This is especially an issue during the startup phase when little income may...

Businesses cost money.   This is especially an issue during the startup phase when little income may be on the horizon, and expenses are mounting.   Discuss, using external sources to back up your assertions, what legal issues are important to consider when an entrepreneur is seeking bank funding, or an Angel Investor, or family funds, or personal funds in order to get the business to the next level.

Solutions

Expert Solution

The startup requires initial funding to start their business, the startup uses different alternate sources to fund their startup.

The different external sources and the legal issues that are consider when an enterprises seeking funding is as follows:

· Bank funding –The bank funding requires strong financial health before raising finance that shows the repayment capability of the startup, the bank financing requires payment of interest and repayment of principle on time. After the funding the startup requires to pay sufficient time on bank compliances.

· Angel investor – The angel investor is not easily and the angel investor invests in the startup only if the startup has already invested some of their own money.

· Family funds – The raising fund from the family members strains the relationship with the family members, the family member does not provide a big amount for a long term.

· Personal funds – Personal funding require to sacrifice their wish and save the money for start up and it is very risky, if the startup not succeed, the startup owner face bankruptcy.


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