Other sources of capital and their cost

Traditional Loans / Debt

  • A traditional loan can be expensive. What is the cost?
    • Your time gather and fill out different applications with multiple banks;
    • Various loan fees that are added to the loan;
    • Having 10% down payment;
    • Compounding Interest; and
    • Repayment of the principle.
  • When all said and done, the cost of a business loan can be 50% of the principle
  • These cost severely reduce cash flow and reduce the growth.

 

Public Market

  • For a smaller company, going Public means you will likely use a Reg A+ offering which will allow you to trade on the OTC
  • The cost are generally as follows, for the purpose of this example we will assume $10M is being raised:
    • SEC form 1A $50-$60K
    • Legal - $100K
    • Audit $2-$10K
    • Marketing generally 2-4% of raise ($300K)
    • Transfer Agent Escrow 0.5% - 1% of raise ($75K)
    • Advisory fee $100K
    • Escrow fee $30K
    • Broker / Dealer $400K
    • Total fees will be nearly $1M or 10% of the capital raise plus warrants
  • After the raise you will have additional cost, such as:
    • Annual audit - $10K
    • Transfer agent fees - TBD
    • Annual DTCC $10-$20K
    • Annual Exchange fees $20K
  • The Halagard approach is to provide a Private Marketplace, which leverages regulations that have a reduce cost compared to public markets i.e. you need to raise less capital

Comparing a Reg A+ Cost to Halagard

The one time cost are generally as follows:

Fee Area Reg A+ Halagard
SEC form 1A $50-$60K N/A in a Private & Vertical Market
Legal $100K Expect to be less
Audit $2-$10K Mandatory
Marketing $2-4% of total raise ($300K Included as part of our overall fee.

Instead of hunting for buyers across the globe we have a place where buyers gather.  Making marketing cost significantly lower

Transfer Agent Escrow 0.5% - 1% of raise ($75K) N/A in a Private & Vertical Market
Advisory fee $100K Halagard fee is $25K to $100K depending on the deal
Escrow fee $30K N/A in a Private & Vertical Market
Broker / Dealer (introductions, et.) $400K N/A in a Private & Vertical Market
Total At least $1M or 10% of the capital raise plus warrants $25K-$100K plus 2.5% of total equity in company

The Annual Cost are generally as follows

Fee Area Reg A+ Halagard
Audit $2-$10K Mandatory
Transfer Agent TBD N/A in a Private & Vertical Market
DTCC $10-$20K N/A in a Private & Vertical Market
Exchange Membership $20K Included as part of our overall fee
Do you want to learn more?

Contact Halagard to learn more about our unique platform and how you may fit into our community.

Halagard has created an interactive platform that opens doors to Opportunity Zones for business owners, investors and community leaders to pursue the dynamic possibilities in distressed communities around the nation.
Jimmy Kemp
President, Jack Kemp Foundation
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