Usually financing comes in the form of traditional equity and debt. However, unique forms of financing are becoming more common in value-added ventures. Also, your financial resources may be supplemented with grants or other public sector funding.

Use the points below to help you prepare this section.

1. Equity Financing

• Describe the expected source of equity financing. Will equity come from the steering committee, a stock offering for producers, venture capital funds or angel investors, or others?
• If a stock offering is proposed, describe the offering and why it will be successful. 
• How much equity capital is projected to be raised from each source? 
• Describe how stock can be sold or redeemed and the expected liquidity of the stock. 
• Identify strategic intentions that could create a future equity “liquidity event” (sale of the company, an initial public offering, infusion from other strategic partners, etc.) 
• Under what auspices is the equity being issued? (that is, is this equity subject to SEC registration for a public offering, is it eligible for an exemption, is it a private offering, etc.) 
• Describe expectations for future equity investment and outline expectations for potential dilution. 
• Are there any special terms imposed on stock that will be owned by founders (that is, restrictions on sale of shares, etc.) 
• Identify the classes of stock to be issued and explain any preferential rights or treatments that may already exist or are being offered.
• If this is a start-up venture, will you provide an exit plan for equity investors? If so, describe it. If you provide an exit plan, how will you acquire stage two financing?

More information is available on Grants.

More information is available on Equity Financing.

More information is available on Equity Offerings.

More information is available on Venture Capital.

2. Debt Financing

• Describe the expected sources of debt financing. 
• Describe the stage of negotiation with each lender. 
• Describe the types of loans (construction, operating, term loans, etc.)  
• Describe the terms of each loan including rates, terms, covenants, warrants, etc. 
• Will any bridge or interim financing be used?  Under what terms and conditions? 
• Who will have the authority to procure debt for the company?

More information is available on Borrowing Money.

3. Other Financing

• Describe other financing such as subordinated or convertible debt, tax-exempt bonds, mezzanine financing, etc. 
• Identify any terms and conditions for outstanding warrants or convertible capital instruments.

More information is available on Financing Your Business.