Forums: Discussions for entrepreneurs and small business.

Help Please!!! I am ready to start my pet store here in Georgia, I have an awesome lease agreement at an outlet mall, a 50% advertising co-op, all vendors and family breeders (not puppy mills!) ready to go but cannot obtain financing through traditional bank loans....now I am attempting to locate find partners/investors to help make my dream a reality. I have read where you have helped similar businesses (bravo), please help me or point me in the right  direction. I will be glad to share my business plan and projections with any interested parties.

Thanks!

Finding investors is not really that easy.  First, you don't even state how much you are seeking or what investors can expect in return.

Also, you might be better off getting out and networking in your community for local investment.  Many CPAs, Lawyers, Doctors and other business owners like to invest in their communities (their way of giving back) - might be your quickest, cheapest and best option.

Also, if traditional loans are not working for you - there are many non-bank private lenders that would love to work with your business - they are not like banks as these organizations actually want to work with you.  Try finding a few of these - do so based on your needs - i.e. if you need equipment - find an equipment lender that works with start ups or if you need working capital find an unsecured lender.

You might consider shares of stock.  Section 1244 stock are shares in a domestic small corporation and the aggregate capital must not exceed $1,000,000 at the time the Section 1244 stock is issued to its shareholders.  Contributed capital must consist of money or other property, not services.  Stock and other securities are not “other property”.  This is available to the original owner [s] of the stock and allows losses for the sale of shares to be deducted as ordinary losses instead of capital losses up to a maximum of $50,000 filing individually and $100,000 filing jointly.  Any amount in excess is treated as a capital loss.  So, the loss from the sale or exchange of Section 1244 stock can be used to offset ordinary income from other sources.  The corporation must also satisfy a gross receipts test.  The test requires a corporation, during its five most recent tax years before the loss, the corporation must have derived more than 50% of its gross receipts from other than royalties, rents, dividends, interest, annuities, and gains from sales and trades of stocks or securities.  Partnerships are eligible for this special tax treatment as well.

Section 1244 can be complicated so consult with a professional. Also, since it only applies when the stock is disposed of at a loss and selling restricted non registered stock can be difficult, the loss generally only takes effect if the company fails.

although the ability to write off their investment loss against income can be a decent worst case scenario - the investors I know don't consider it a very significant part of their decision process.

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