TLDR: I have no income and need money to finish launching a new business.
Background
I am 35, my wife doesn't work and I have three young children. I have no problem with risk, as long as the risk is reasonable and the reward is sufficient for that risk. I have no debt except my mortgage.
I sold a business last year that I started ~15 years earlier. That business was my only adult employment. I've spent the last year doing a little consulting work and trying to launch a new business that I believe in deeply. I never had a business loan (but I did have a line of credit) during those years, so the finance part was easy.
The New Business
My new business involves an engineer to develop the product ($$$), a patent ($$$), package design, inventory, and [insert other expensive things here]. I have self funded to this point and have a successful prototype that works as a proof of concept. There is no product like this on the market and the product has a potential customer base of 1M+ people. I've been tight-lipped about the new product, but with the general overview I have given a couple people, the response is always: "I want to invest!" I have a small production run going now for outside testing before I sign off on a full production run.
The (Financial) Problem
A family living without income while I invest in a new business has burnt through a lot of cash. I need some funding to get to market. I thought it would be easier to obtain since I have a proof-of-concept and clear path to market paved. Here is what I have checked on:
- Bank: Will not consider a loan until I have a record of income. He said they might be able to do a car loan (on my paid off cars) or a HELOC if I could get a little more consulting income.
- SCORE Mentor: I contacted SCORE for help. A week later a loan officer from a large bank called and left a voicemail that I could come in to meet with him at the bank for "mentoring." I have tried to call him back without a response, but this seems like a HUGE conflict of interest, which makes me skeptical about even meeting him.
- Family: My mortgage is through family, so that well is tapped...but I am able to defer all mortgage payments indefinitely, which definitely helps!
- Friends/Outside Investors: I haven't looked seriously here. I am worried about giving up too much equity early on and how to value a business for investors at this stage. If this is a good option, I would like to know how to proceed safely.
- ROBS: This is currently the most promising option. I have a SEP IRA that has enough money to get me to market (as long as I don't hit a big snag). The downsides I identified are: gambling my IRA, possible IRS audits, more complexity with business structure.
I could really use some unbiased financial advice on obtaining funding for a new business. Please feel free to correct anything I have misunderstood or suggest other options.
TIA!
Submitted December 10, 2018 at 06:38PM by oldschoollunchhour https://ift.tt/2SCt7t1
