When a company decides that it must raise capital, a key question that must be answered is how much the company is worth. For example, if the business needs $500,000 to get started and/or grow, how much of the equity in that company should $500,000 command? Once this question is answered, the company will go out and try to find investors. When doing so, a key question often arises as to whether the valuation is “pre-money” or “post-money. ” “Before the money”" or “pre-money” and “after the money” or “post-money” denote simple concepts. However, these simple concepts can even confuse even the most sophisticated analysts at times. If a company is valued at $1 million on Day 1, then 25 percent of the company is worth $250,000. However, there may be an ambiguity. Suppose the company and the investor agrees on two terms: (1) a $1 million valuation, and (2) a $250,000 equity investment. In this case, the company may offer the investor 250 shares for $250,000. Immediately there can be a disagreement. The investor may have thought that equity in the company was worth $1,000 per percentage point, in which case $250,000 gets 250 out of 1,000 shares or a 25% equity position. Conversely, the company may have believed that the investor was contributing to the enterprise which was already worth $1 million. Under this rationale, the $250,000 would give the investor 250 shares out of 1,250 shares or a 20% equity position. The critical issue was whether the agreed value of $1 million to be assigned to the company was prior to or after the investor’s contribution of cash (pre-money) or post-money. In the above case, a pre-money valuation of $1 million and a post-money valuation of $1. 25 million were equivalent. Because mixing up the terms could significantly increase the cost of capital raised, companies must be sure to understand the two metrics and agree with investors to the metric that raises them the capital at the appropriate price. Raising Capital for Your Business – How Long Does it Take?Most companies vastly underestimate the time commitment necessary to successfully complete a financing. In actuality, a company seeking financing needs to budget between 500 to 1000 work-hours to the capital-raising process, spread out over a 6-9 month time period. The key processes in the capital-raising process include 1) perfecting the business plan, offering memorandum and other company due diligence materials, 2) developing a comprehensive, targeted prospective investor list, 3) contacting this list and responding to investor due diligence requests, and 4) negotiating the transaction.
Obama’s 2% Rate Loan Modification Plan – How it Works & Which Homeowners Qualify
Obama’s loan modification plan is available for borrowers facing financial hardship and at risk of losing their home. Under this program, your home loan could be revised so that your monthly payment is reduced to an affordable amount. The goal is to keep families in their homes, stop foreclosures and allow the economy to recover. The plan is called Home Affordable Modification Program-or HAMP. This home retention plan is paid for by the federal government-your tax dollars-so do not hesitate to take advantage of this helping hand. Over 5 million homeowners are expected to benefit under this $75 billion government program. Here’s the basics of the plan: All homeowners who ask for consideration must be reviewed for eligibility-even if they have been turned down previously Borrowers must show evidence of a financial hardship or the imminent risk of default Lenders must follow a standard formula to determine if a borrower meets the federal qualification guidelines-reducing the interest rate to as low as 2% Homeowners who meet the basic guidelines will be asked to submit a loan modification application, including a financial statement and proof of income The banks are motivated to modify as many loans as possible for a couple of reasons. The lenders will be paid by the Treasury Department for each loan they modify using the standard federal terms. Also, President Obama has strongly encouraged all banks to reach out to homeowners to offer this plan-whether they are behind on their payments or not. If a financial hardship exists, then a homeowner is encouraged to begin the application process. What should you do if you need a 2% mortgage modification? The first step is to learn more about the federal guidelines for approval and just what it takes to meet those guidelines. Do not complete your paperwork or disclose your financial information until you understand the 4 step formula your bank will use to qualify you. This is not the time to take any chances. Learn, prepare, then apply-this is too important to risk denial.
When shopping for auto insurance the ultimate goal is to find a reputable company and the lowest premium. While searching for insurance on the web or over the phone it is important to remember carriers will offer different discounts for various reasons. Saving money on your auto insurance is easy, when requesting a quote ask if the following discounts apply to you: Low Mileage Discount: Those who drive less than the average driver are more often than not eligible for a low mileage discount. The magic number is commonly 7,500 miles or less per year however some carriers offer discounts for those who drive less than 10,000 even 12,500 per year. This key discount can make a significant difference and is important to ask about. Auto Club Member: Drivers who belong to an auto club, such as AAA, are usually eligible for additional discounts and in some cases may increase your current auto policy limits with NO extra charge! Good Students: Not only will good grades get a student into the college, graduate program, or aspired career – they can also give young drivers a discounted rate on their auto insurance. Continuous Insurance: Drivers with a continuous record of auto insurance policies are often eligible for discounts. Completed Defensive Driving: Once successfully completing a defensive driving course, motorists should be eligible for an additional premium discount.
The presence of multiple debt relief options like Debt settlement, debt consolidation, credit counseling etc, give comfort to the debtors, but only to a certain extent, as they often get confused and mislead by the various debt settlement options in the market. The first organized step to get rid of your debts is to contemplate calmly and sensibly on your financial status and come across the most suitable solution that will make you debt-free in the shortest possible time, without much of its ill-effects. Let us consider thoroughly the actions and decisions that involve common sense and presence of mind, which helps a debtor to think clearly and act readily to become debt-free. Assess and evaluate carefully your monetary position, including your income and outstanding that you owe to the creditors, along with your necessary expenditures. Chalk out a proper and well-calculated budget and check whether you are capable of paying off the debts without any debt-relief options. If yes, contact your creditors and negotiate with them about the interest rates, period of payment and the debt amount, and fix up the payment procedure accordingly. If no, then go to the following actions. Talk with your close friends, neighbors and relatives about your financial dilemmas, they might be able to provide you with some wonderful solution from their own experiences, or even could help you out with some personal references. Check out the Better Business Bureau site and your nearby Federal Trade Commission office to know more about the most relevant option as per your condition. This could help you in finding out the legitimate, reputable and non-profit debt settlement companies. The Association of Settlement Companies (TASC) website and offices can also guide you about the same, and let you know about the best debt relief option for you.
Debt reduction is also known as debt negotiation or debt settlement. It is one of several debt relief options available to consumers who find themselves drowning in unsecured debt, such as credit card debt, medical debt, deficiency balance, payday loan, or other consumer debt. All debt resolution options — whether it be bankruptcy, credit card counseling, or debt settlement — have pros and cons. Like other debt relief options, debt settlement / negotiation has positive and negative aspects you need to understand. Pros and cons of debt settlement Instead of making monthly payments to your creditors, these programs negotiate lump sum settlements with your creditors, frequently reducing your debts by 50% to 60% of your balances. These programs usually take two to three years to complete, which is typically the fastest option for a consumer to reach debt freedom. The first, immediate drawback to debt settlement programs is that they reduce the consumer’s credit score during the duration of program and for a year or two after completion. The score reduction is not permanent, and credit scores are known to self-repair when the accounts are resolved. Because credit score calculations are based primarily on an consumer’s recent credit history, as the accounts are settled and age they tend to have less of an impact on the overall credit score. Typically, the fact that a consumer is working with a debt settlement company does not appear on a consumer’s credit report. As a result, the report will appear as if the individual settled the debt with the creditors directly, as opposed to filing bankruptcy or using a credit counseling program to eliminate the debt. Visit What You Need to Know about Your Credit Score to learn more. The second drawback is that collection activity will be taken against the consumer. This is because the consumer stops making regular payments to creditors. As a result, creditors will make multiple phone calls and send collection letters to the consumer’s residence. For many consumers, a creditor’s collection calls can be more stressful than the drop in their credit score. No honest settlement company guarantees they can stop collection attempts completely. Creditors and collection agencies have a right to collect on a debt owed. However, depending on the state where one lives, there are regulations that can help reduce call volume and collection activity. This can be accomplished using a cease communication form-letter that demands the creditor or its collection agent communicate through letters rather than phone calls.
