Too many businesses that have great money-making potential fail because they don' have the capital necessary to keep the business running long enough to hit escape velocity. For those businesses, there are a number of options available for keeping the doors open, including business lines of credit, raising money through Regulation D (504 and 506), disclosing a candid look at the strength of your business in a private placement memorandum, or going public.

No matter the method, Fortune Law Firm can help get your business off the ground or help keep it afloat.


504 Reg D

Rule 504 allows a privately held company to raise up to $1 million within a 12-month period. The securities may be offered to an unlimited number of investors, and no specific type of disclosure material is required to satisfy the exemption. In some instances, Rule 504 offerings may be made through public solicitations and the securities sold are not subject to resale restrictions and investor accreditation standards.


506 Reg D

Rule 506 does not limit the dollar amount of the securities that may be sold in a private placement. The securities may be sold to an unlimited number of accredited investors. However, each nonaccredited investor must, either alone or with a purchaser representative, have such knowledge and experience in financial and business matters that the investor is capable of evaluating the merits and risks of the prospective investment (or the company must believe at the time the securities are sold that each nonaccredited investor satisfies this requirement).


Publicly Traded Companies

Taking your company public can be a good revenue source because it allows you to raise capital through the sale of stock shares. Of course, making the switch from private to public also subjects the business to much more regulatory oversight.


Private Placement Memoranda (PPMs)

A Private Placement Memorandum (PPM) is a vehicle through which you can raise capital for a business by selling stock or security in that business. A PPM is a legal document you provide to prospective investors that describes the investment in hopes of raising money. It identifies the company selling the securities, outlines the terms of the offering (which is why PPMs are often called the "offering memorandum" or "offering document"), and discloses the risks of the investment.


Business Lines of Credit

A business line of credit is defined as an arrangement between a financial institution, usually a bank, and a customer that establishes a maximum loan balance that the bank will permit the borrower to maintain. The borrower can draw down (withdraw funds) on the line of credit at any time, as long as he or she does not exceed the maximum set in the agreement.