How to Use Options and Convertible Notes to Raise Money

How to Use Options and Convertible Notes to Raise Money

 How to Use Options and Convertible Notes to Raise Money

If you want to know how to use options to raise money for your business, you’ve come to the right place. In this article, you’ll find out how to use options and convertible notes to raise funds for your business. You have multiple solutions and one of them is trading options which is usually the most lucrative method for raising money.

How to Use Convertible Debt Notes to Make Profit

A convertible note is one form of short-term debt that turns into equity. The valuation of the convertible notes is based on financing that should not be exceeded after a certain period. During the evaluation of convertible notes, you must pay attention to the following criteria:

The discount rate is the representation of the valuation discount that investors receive in one financing round. It compensates the risk of losing invested money.

The valuation cap is a reward for bearing earlier risk. In the case of evaluation caps, you convert notes into equity and convertible note holders get the equity. This applies if the company takes off out of the gate.

Interest rate shows during lending money to a company. Here, the convertible notes will accrue interest. As opposed to being paid back in cash, the interest goes to the principal that is invested, which increases the number of shares.

The maturity date is the time when the company needs to repay the convertible note.

To understand the flexibility of convertible notes, it is important to pay attention to how the notes convert into equity. In most situations, we have the valuation cap and discount rate combined, and we can evaluate convertible notes by these two parameters. At the same time, the convertible note should not have to have a valuation cap. In this case, the discount rate determines the value of the convertible note when it becomes equity. Note holders will get a higher share price and the discount will drive the conversion

How You Can Profit from Call Options

Call options are options that are part of financial contracts that give the buyer the right to buy a stock, bond, or commodity within a specified period. All the mentioned underlying assets tend to increase in price, and that is why a buyer acquires these assets. A call option is different from a put option then the holder sells the asset before the expiration period.

Call options are in use in case of three primary purposes. These are speculation, income generation, and tax management. With all these purposes, the market price of the call option is defined as premium. A call option provides rights that have the premium or the price at the end of the specified period. One of the most profitable solutions when it comes to call options is the solution of covered calls. With a covered call strategy, you can own an underlying stock whose price rises sharply.

How You Can Profit from Writing a Call

Call writing is separated into two forms—covered call and naked call. Covered call writing is good for advanced option traders who want to generate extra income from a portfolio. With covered calls, you can write calls on stocks that are held within the exact portfolio.

Another option is naked call writing, which is for risk-tolerant and sophisticated option traders who want to get the maximum rewards. The risk profile with the naked call is similar to that of a short sale in stock. With naked call writing, your maximum loss can be unlimited, but the possible gain is the biggest when compared to other types of calls.

As you can see, you can trade options or use convertible notes as a way of raising funds for your company. No matter which methods you apply, you must be patient with results. The most profit comes from rates that are increasing over time, and that is why a good method of calculation can give you a significant advantage in the long run. Raising funds for your company is easier when you have legal support from a lawyer. At the same time, the financial support could be a real advantage if you want to collect money faster and easier. Investing money into options and convertible notes could be the best money you can invest.

Illinois Hemp Lawyer

Illinois Hemp Lawyer

  Our Illinois Hemp Lawyers have written extensively on the first new agricultural commodity of the 21st century - hemp - over on our sister website focusing on our cannabis law practice - www.CannabisIndustryLawyer.com. Illinois Hemp Farmers & Processors...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime. R. Martindale

Need A Workout Lawyer

Thomas Howard has completed dozens of loan workouts and helped financial institutions recover the collateral base.  Call (309) 699-4691.

REACH US BY EMAIL

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Why Do You Need a Buy Sell Agreement Lawyer

Why Do You Need a Buy Sell Agreement Lawyer

Buy Sell Agreements

Buy Sell Agreement Lawyer

Why Do You Need a Buy Sell Agreement Lawyer?

If you are building a business while you form a partnership, you will need help from a  buy sell agreement lawyer. Signing a buy sell agreement with the partner will protect you from unexpected situations and legal issues. That is why a buy sell agreement lawyer can make an agreement that will protect both parties.

A buy sell agreement claims your rights when it comes to difficult situations. Your partner can fall ill or become unable to operate the business the right way. In that case, a buy sell agreement lowers your financial risks of bankrupt or debt. You can protect yourself by signing an agreement that will keep your business intact.

Comparing a buy sell agreement with a prenuptial agreement is the most accurate comparison. In a prenuptial agreement, you can get out of the marriage under certain conditions. At the same time, you can protect your financial operations. A buy sell agreement offers the same rights, just with one small difference. In a buy sell agreement, you can cover all the financial transactions between the business partners. This makes a buy sell agreement more reliable and more effective in terms of financial stability.

Speaking about two common forms of agreements, we can separate the contracts into:

  • Cross-purchase agreement, and
  • Redemption agreement
A cross-purchase agreement happens when the remaining owners decide to purchase the shares of the business that is for sale. In this matter, it is important to know that the mechanism relies on a life insurance policy.

A redemption agreement is another form of a buy sell agreement. Here, we have a situation when the business entity buys the shares of the business. With a redemption agreement, the contract limits the ability of business owners to sell or transfer their ownership stakes in the business.

Both the cross-purchase agreement and redemption agreement are part of the possible contacts between the business owners, and they can mix the two in their business buy sell agreement. The importance of a buy sell agreement covers most of the financial risks that may occur in the business.

How to Know If a Buy Sell Agreement Is Right for Me

If you plan to start a business with a partner, a buy sell agreement can offer many protective points that can change your business perspective. Many life situations are inevitable and we can rely on this kind of contract when the official regulations are necessary for business operations. Your business partner may go ill or die, and that is when a buy sell agreement comes into effect. Your business capital will be protected and you can continue all the future business operations.

Cross-purchase buy and sell agreements contribute to the rights of the business owners. As a remaining business owner, you can buy the interests of the selling owner. This applies when a selling owner is no longer capable of maintaining their business obligations. Buy and sell agreements are also important in the method of determining the overall business value at the beginning of the business as well as when one of the business owners remains the only owner.

Careful drafting of a buy sell agreement can also eliminate or lower any potential estate taxes that apply at your death. In the situation when you want to pass your ownership interest to one of your family members at your death, avoiding the estate tax is one of the possible outcomes.

Do I Need a Buy Sell Agreement Lawyer?

A buy sell agreement lawyer is necessary if you want to avoid state taxes and protect your business capital and operations. With a buy sell agreement, you will be able to buy shares of the business and prolong your business perspective.

A good buy sell agreement lawyer can help you draft the buy sell agreement that protects both your business partner’s interests and your interests. You will have the right to continue the business operations even in the case of illness or death of your partner. It is possible to stay protected and define a new business strategy with a buy sell agreement. A good buy and sell lawyer can help you craft and improve the right contract that protects you in the case of inevitable circumstances.

Illinois Hemp Lawyer

Illinois Hemp Lawyer

  Our Illinois Hemp Lawyers have written extensively on the first new agricultural commodity of the 21st century - hemp - over on our sister website focusing on our cannabis law practice - www.CannabisIndustryLawyer.com. Illinois Hemp Farmers & Processors...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime. R. Martindale

Need A Workout Lawyer

Thomas Howard has completed dozens of loan workouts and helped financial institutions recover the collateral base.  Call (309) 699-4691.

REACH US BY EMAIL

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Commercial Mortgages

Commercial Mortgages

Commercial Mortgages & Foreclosure

commercial mortgage foreclosure

commercial mortgage foreclosure

  • Commercial Mortgage Foreclosure

The main collateral for many people and businesses is the real estate it owns.

A commercial mortgage is a grant of a security interest on a parcel of the business’ real estate.

Commercial mortgages allow for greater rights for the bank as compared to residential mortgages, which have greater consumer protections at both state and federal levels.

Drafting best practices for your commercial mortgages are discussed in the video below: be advised – the terms must be in the mortgage BEFORE the foreclosure begins to maximize recovery and control costs.

“A conspicuous Cross-Collateralization clause is only one part of it.”.

A buy sell agreement claims your rights when it comes to difficult situations. Your partner can fall ill or become unable to operate the business the right way. In that case, a buy sell agreement lowers your financial risks of bankrupt or debt. You can protect yourself by signing an agreement that will keep your business intact.

Comparing a buy sell agreement with a prenuptial agreement is the most accurate comparison. In a prenuptial agreement, you can get out of the marriage under certain conditions. At the same time, you can protect your financial operations. A buy sell agreement offers the same rights, just with one small difference. In a buy sell agreement, you can cover all the financial transactions between the business partners. This makes a buy sell agreement more reliable and more effective in terms of financial stability.

Picture of Collateral with foreclosure risk

Here’s the bullet point take aways from the video above.

  • waiver of the right of redemption – very often lenders that do not get deep in the weeds of commercial lending for get this – looking at you credit unions –  While redemption cannot be waived by consumer mortgages (residential mortgages) commercial mortgages – but if it is just business – you get what you negotiate.
  • cross-collateralization languages why – to stave off a 2nd mortgage coming in and having its hand out when other debts secure your mortgage for more on this on our case law update series – PNB v. Banterra Bank. But we stress the 2 points any good cross-collateralization clause requires.  
    • conspicuous cross-collateral clause on the first page of the document that refers to all debt then or thereafter arising, related or unrelated to the mortgage debt;
    • Define indebtedness to include the note amount and all amounts that may be indirectly secured by the cross-collateralization provision.
  • Define maximum indebtedness of the mortgage to be twice the mortgage debt to add more strength to cross-collateralization clause.
  • Acceleration and deceleration clauses.  Our Section council was discussing this last meeting and some were of the opinion that if the bank permits the borrower to reinstate – bring the loan entirely current – it can do so, but there should be some modification that provides for such – in addition to any judicial finding that permits the reinstatement as a borrower only gets one – for 5 years from the date of the dismissal.
  • Link to the quoted material regarding recession risk related to rise in credit spread of investment grad bonds from Bloomberg.
Illinois Hemp Lawyer

Illinois Hemp Lawyer

  Our Illinois Hemp Lawyers have written extensively on the first new agricultural commodity of the 21st century - hemp - over on our sister website focusing on our cannabis law practice - www.CannabisIndustryLawyer.com. Illinois Hemp Farmers & Processors...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime. R. Martindale

Need A Workout Lawyer

Thomas Howard has completed dozens of loan workouts and helped financial institutions recover the collateral base.  Call (309) 699-4691.

REACH US BY EMAIL

9 + 11 =

Help I Was In a Wreck!!! When Should I Call My Attorney?

Help I Was In a Wreck!!! When Should I Call My Attorney?

What your attorney can do for you & When DO you need the Attorney with you!!

We’ve all seen people and their cars on the shoulder of the road or blocking the intersection and the police are there investigating and directing traffic around a collision. There are three times having an Attorney assisting you in dealing with a collision and helping you recover for losses to your property and your well-being.  Here are some tips on what your attorney can do for you at each of the stages of an auto collision claim.

JUST AFTER THE COLLISION:

  • Helping you get your information organized as to your insurer, the traffic collision report, and contacting the other driver’s insurer. Getting to get yourself checked out by a healthcare provider if you weren’t treated at the scene of the collision or at the Emergency Room that night. You might not realize that the stiffness and pain could only arise after your body’s adrenaline is gone.
  •  Helping you at the first contact with the other driver’s insurer as they can ask what seems like a simple question to get you to waive your claim. An example; asking you if you were hit by a Ford F-150 and you’re not a truck person so you don’t know how to answer. Your attorney will ask if they mean the vehicle belonging to their insured (the other driver) and then their little trick has failed.
  • Negotiating on the property damage to your vehicle; either insurer (yours or theirs) will try to minimize the damages and value of your vehicle. Your attorney will be able to make sure your vehicle is safely repaired or if the vehicle is “totaled” negotiate the best car value to enable you to replace your vehicle.