Hello I will be assisting you. Let me review the question
I will continue to answer the question as it relates to possible solution but in the interim please let me know if the credit cards are in your personal names or under a business account
The following option are not all the options that may exist rather ones that I have come across in my career
The cards are in our name. Some of the Amex list the business name on them, but most likely were issued to us personally. We are not a corporation. We are sole proprietors.
Thanks for letting me know about you being a sole proprietors. Because of this I will have to change most of my answers that I am preparing as legally you are restricted in many ways but you may have some solutions.
option 1) I was about to suggest that you find an investor / partner who will infuse capital in exchange for a piece of the business (i.e. equity) but as sole proprietors you cannot do that
you have to options then
1) incorporate your business and the find an investor / partner. If you incorporate you will also be able to find a buyer for the business. As a sole proprietor you are not a business and the most you can sell is the equipment rather than the good will of the business.
2) continue as you are and seek loans grants. But be very careful as banks who lend to sole proprietor often seek a lien against the equipment and personal guarantee often against real estate that you own. Be very careful with personal guarantees!
also, do NOT pay off the credit card debt with a home equity loan. Credit card debt is unsecured and could be dismissed in bankruptcy should you come to it, but if you take a home equity loan to pay off the credit card and then are not able to pay the new mortgage you may lose your home!
Ok, i would imagine that the bank already has our personal guarantee for the mortage payment. Could you elaborate on Loan Grants. Also, are you aware of any private investors/ companies who are loaning to small business, who are legitimate?
By legitimate, I mean the people who are loaning the money. Also, we do not own our home, as it was destroyed in a hurricane in 2008. We are currently leasing a house.
Is there another expert available? I still have some questions.
Hi again, are you coming back online, are do I need to contact another expert? Thanks.
To receive a loan as a small business or to bring a partner on board you will need to incorporate first.Lending to small businesses is generally a very local activity, so you need to visit every bank and credit union in your area. In addition, lookup the closest SBA branch to you and see if you qualify for a Small Business Loan. Look one up at: http://www.sba.gov/local-assistance?ms=fp
By the way, experts don't have to remain in live chat to continue answering. Please continue responding
Thank you. did you receive my question regarding why we would not be considered a business? We file and pay 941 forms, Futa tax, Workers Comp, Sales Tax, etc. Does this not qualify us as a business? Thank you for your answer. ( i should have used a period and not a question mark. Sorry!)
Hi again, I am just checking to see if you saw my last question regarding our filing of all business forms etc.
You may have an EIN and be filing the relevant employer taxes but that does not mean that you are a "company" that can sell equity. Only an entity that incorporated (i.e. a corporation or a Limited Liability Company also known as a LLC) can sell equity.As noted, in order to bring in an investor / new partner you will need to issue (sell) equity in a company and therefore you must first incorporate.Generally, loans are not issued in exchange for equity and therefore do not necessarily depended on you being incorporated. Though that is recommended, since to the extent possible you want to limit your personal exposure to debt and assign as much debt as possible to the company.
I hope this further clarified my answer
Thank you very much for your answer. If we decided to become a corporation, or an LLC, how does that affect the existing debt that we are challenged with currently? Is it folded into the business or does it remain separate from it as personal debt. Thank you again for your time.
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