New York Business Financing Lawyers

Attorneys Assisting Businesses With Financing and Fundraising in New York City

Securing adequate financing can be one of the most critical challenges that businesses may face. Financing may need to be addressed at every stage of development, whether startup ventures are seeking seed capital or established companies are taking steps to grow and expand their operations. The methods businesses may use to raise capital can vary widely, and they may include equity investments from venture capitalists and angel investors, loans through banks or other lenders, and other options.

When addressing concerns related to financing and fundraising, businesses will need to make sure they meet specific legal requirements while complying with the applicable laws and regulations. Poorly structured financing arrangements can result in the loss of ownership control, unfavorable loan terms, regulatory violations, disputes with investors, and difficulty obtaining future funding.

The attorneys at Health Counsel Group provide legal counsel for businesses in New York and throughout the United States, helping them address financing and fundraising matters correctly. We understand the legal concerns that may affect various financing methods, and we work with clients to structure transactions that will meet their needs while protecting their interests. With our knowledge of securities laws, commercial lending regulations, and negotiation strategies, we can help businesses secure financing on favorable terms while ensuring that they maintain compliance with their legal requirements.

The Importance of Proper Financing Structures

Financing transactions will need to be structured carefully to help a business achieve its objectives while meeting regulatory requirements. The legal structure of an agreement may affect numerous critical issues for a business, including valuation and pricing, ownership structures, governance and control rights, exit scenarios, taxes, and future fundraising options.

Businesses will need to ensure that they comply with the applicable securities laws. The offer and sale of securities will involve registration requirements under federal and state laws. Registration may involve substantial costs, time commitments, and disclosure obligations. In some cases, exemptions may be available that will allow private offerings without registration when certain conditions are met. Businesses will need to understand which exemptions may apply, and they will need to take steps to comply with all requirements in order to avoid securities law violations.

The team at Health Counsel Group can help businesses structure financing transactions that will comply with the applicable legal requirements while supporting their strategic goals. We can provide guidance on regulatory compliance, and we can draft and negotiate transaction documents to ensure that the terms of agreements will position a business for long-term success.

Equity Financing Transactions

Equity financing involves selling ownership interests in a business to investors in exchange for capital. This approach can help a business avoid debts, but it may result in ownership dilution, and investors may be granted certain rights regarding business decisions and the distribution of profits.

In venture capital financing arrangements, institutional investors may make substantial investments in companies with high growth potential. In these transactions, venture investors may be prioritized over common stockholders. Governance rights in venture capital transactions may include board representation, protective provisions requiring investor consent for major decisions, and information rights entitling investors to financial statements and other updates. These provisions may affect how businesses can operate and make strategic decisions.

Angel investors may invest smaller amounts than venture capitalists, and they may accept simpler terms. However, angel investments will still require proper documentation establishing the terms of investments, ownership percentages, and investor rights. Even informal investments must comply with securities laws, and they should be properly documented to avoid future disputes.

The attorneys at Health Counsel Group can help businesses determine the proper steps to take in equity financing transactions. We can assist with negotiating term sheets, drafting investment documents, and ensuring compliance with securities laws. We will work to protect our clients' interests throughout the investment process.

Debt Financing

Companies may secure financing by borrowing money that must be repaid with interest. Unlike equity financing, debt does not dilute ownership, but it will create repayment obligations, and certain operational restrictions may apply.

Bank loans may be available for established businesses with demonstrated cash flow and collateral. Commercial banks may offer loans for specific purposes like equipment purchases or the expansion of a facility. Loan agreements will establish interest rates, repayment schedules, and collateral requirements, and they will detail the procedures that will be followed upon default.

Financial covenants require borrowers to meet specific financial requirements, such as debt-to-equity ratios or minimum working capital levels. Violating these covenants may constitute a default, which could trigger the acceleration of loan repayment or other remedies. Businesses will need to make sure they understand their covenant requirements so they can maintain compliance.

Alternative lenders, including online platforms, private debt funds, and specialty finance companies, may provide capital to businesses that do not qualify for traditional bank financing. These lenders will often charge higher interest rates and fees, but they may offer faster approval processes. Businesses will need to understand the potential risks involved in these financing agreements.

The lawyers at Health Counsel Group can provide guidance for businesses on debt financing transactions, making sure their interests will be protected. We can review loan agreements, negotiate favorable terms, ensure that proper documentation is provided, and help clients maintain compliance with financial covenants.

Crowdfunding and Alternative Sources of Capital

Crowdfunding may be a method of securing financing in certain situations, but businesses will need to make sure they meet the proper legal requirements. In general, businesses are allowed to raise up to $5 million from both accredited and non-accredited investors in a 12-month period through online platforms.

Reward-based crowdfunding through platforms like Kickstarter and Indiegogo will generally involve pre-selling products or offering rewards rather than selling securities. While this type of funding may avoid securities law requirements, campaigns will create contractual obligations to deliver the promised rewards. Consumer protection laws and tax considerations may need to be addressed.

Small Business Administration loan programs can provide financing for qualifying small businesses. Certain loans may offer general-purpose business financing or be used for real estate and equipment purchases. Startups and small businesses may qualify for microloans. Businesses that participate in these programs will need to meet specific eligibility requirements, and restrictions may apply.

At Health Counsel Group, we advise businesses on alternative sources of capital, helping them evaluate their options and comply with the applicable requirements. We work with clients to structure financing arrangements that will support their objectives.

Due Diligence and Disclosure

Investors and lenders may conduct due diligence to evaluate a business and identify risks before moving forward with financing transactions. Businesses will need to prepare for due diligence by organizing financial information, contracts, intellectual property documentation, evidence of regulatory compliance, and other materials that investors will review.

Securities laws include anti-fraud provisions, and businesses may be liable for material misstatements or omissions. Financing transactions will require an accurate disclosure of material information. Businesses must provide investors with the information needed to make informed investment decisions. Misleading statements or the failure to provide required information could lead to penalties.

The attorneys at Health Counsel Group work with businesses to ensure that due diligence can be completed correctly. We can draft disclosure documents and help clients respond to requests for information from investors. We can take steps to identify and address potential issues before they become obstacles, and we can help our clients avoid potential penalties under anti-fraud laws.

Contact Our New York City Business Financing and Fundraising Attorneys

When seeking capital, businesses will need legal help to ensure that they can navigate the complex requirements involved in financing transactions and structure agreements that will meet their needs and protect their interests. At Health Counsel Group, we understand the legal issues that can affect business financing, and we can provide the guidance needed to help clients secure funding on favorable terms. Contact our New York business fundraising lawyers at 123-456-7890 to schedule a consultation and discuss your business financing needs.