Dinn, Hochman & Potter, LLC

Crowdfunding a newer option in business financing decisions

The plan is in place and the ideas are sound. The Ohio entrepreneur is ready to move forward with his or her business plans. At this point in the process, plans can move forward or come to a screeching halt. The determining factor appears to be the business financing decisions that the company makes.

One of the quickest and easiest ways to begin a new business is to self-fund by using credit cards or a personal bank loan. While this might quickly provide needed capital, it also creates personal risk for the individual and may not provide as much capital as is needed. For this reason, many entrepreneurs look to other means to finance their new businesses.

Crowdfunding is becoming a popular option for new businesses. With crowdfunding, the company offers a portion of its equity in exchange for needed capital. This is very much like a large corporation seeking investors; however, on a smaller scale. Based upon an individual's net worth or annual income, the individual is able to invest up to a specified dollar amount in this manner. Like with other investments, there is the risk of losing the entire investment, and is there is also the possibility of a large reward.

Business financing decisions can often be the difference between success and failure for the new Ohio business. As a part of the decision making process, the entrepreneur will want to review the various options, including crowdfunding. He or she will then want to discuss these options and their various ramifications with experienced legal counsel.

Source: smallbusiness.findlaw.com, "What Is Equity Crowdfunding?", Accessed on July 5, 2017

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