Secure financing through institutional loans

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Reference no: EM133892534

Question

In the event that Huyen and Van are unable to secure financing through institutional loans, they can easily raise capital by selling shares of stock to investors. This structure facilitates attracting investors and raising funds to finance the business's expansion or other financial needs. It provides Huyen and Van with the opportunity to acquire additional capital from investors through the issuance of shares. However, if they form it as a closely held corporation, it is doubtful that a lender would agree to loan them the starting capital without personal guarantees. Issuing stocks to nonvoting shareholders might be a better solution if Huyen and Van are particularly sensitive about protecting personal assets in the event the business fails and they are left owing a large amount of debt.

Reference no: EM133892534

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