Due Diligence Documentation

Prior to funding, all sources will require "Due Diligence" information. Begin assembling a package of due diligence documentation as soon as possible. This package may be reviewed early on to determine if the project is fundable, or if additional financial or management partners for your business are required, in order to get funded.

All the information required in the "Due Diligence" checklist will be thoroughly reviewed by the funding sources used, whether it is the SBA, a bank, venture capital company, private or public company, or a private investor.
"Due Diligence" is a legal requirement for all persons in a fiduciary or responsible position. Having this information early also helps to determine the feasibility and best method for obtaining a funding source for the venture. The "Due Diligence" will be done by an outside agency and the cost will be absorbed by the client, prior to a commitment. Other processing fees may apply.

Debt Or Equity?

Which Kind of Capital is Appropriate for Your Business?

Debt

Debt is money borrowed, that must be repaid at a set time period and generates income for the lender over that time period. Lending sources include not only banks, but also leasing companies, factoring companies and even individuals.

Lending sources look primarily at two factors: how risky is the loan; and can the company generate sufficient cash to pay the interest and repay the principal. The growth potential of the company is secondary; the primary consideration is the track record and asset base of the company. Usually the debt must be secured against the assets of the company and very commonly must also be secured against the assets of the owner of the company, also called a personal guarantee.