Everyone learned early on that money does not grow on trees. This fact is not lost on businesses that often need to raise money at various stages in their development. The fortunate thing for Michigan businesses is that the government is making it easier for you to raise the capital you need.
Recent legislation such as the Jumpstart Our Business Startups Act (or JOBS Act) and the Michigan Invest Locally Exemption (or MILE) has forced regulators to loosen their restrictions on how your business seeks funding. These new laws are sometimes referred to as Crowdfunding Laws because they allow businesses to raise capital through crowd sourcing.
Crowdfunding is something that has been widely embraced by the startup community but crowdfunding is a tool that can be used by all businesses. There are no limits on who can use crowdfunding sources. This means crowdfunding can not only be used as a way for a startup to raise capital but it can used for an existing business to raise the capital it might need to develop new products, expand operations, or construct a new facility.
Types of Corporate Finance
Crowdfunding – Crowdfunding is the new kid on the block. Crowdfunding can take a wide range of forms that include:
Venture Capital or Angel Investor – A more traditional rout to raising capital is through venture capitalists (or a VC) or an angel investor. Angel investors generally give more favorable terms to startups and businesses with their goal being more focused on seeing the business succeed. VC’s are more focused on investments and terms that can provide them a higher rate of a return. Both of these sources of capital have benefits and drawbacks.
Business Loans – Business loans are the most commonly known form of corporate financing. Going to a bank and getting small loan or an unsecured loan is the way most people believe businesses are financed. With economic trends, finding a bank that will qualify you for a business loan can be tough and often times the lending institution will want some form of security including a personal guarantee of the business owner.