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Economic Development

ALTERNATIVE CAPITAL SOLUTIONS

FAn expert panel answers burning inancing questions | by Ian Singer

our successful New Jersey organizations combined marketplace savvy and shared business

growth expertise during a recent 90-minute breakfast panel event entitled “Alternative
Capital in Today’s Marketplace” at the Westin Princeton. We asked some questions of

the moderator and panel of presenters. For more information, visit Szaferman Lakind at
Szaferman.com; Hill, Barth & King at HBKCPA.com; and Reserve Capital Group at
WHAT DOES
ReserveCapitalGroup.com.
“NON-TRADITIONAL
FUNDING” MEAN?

WHAT IS THE STATE OF TODAY’S CAPITAL MARKETS?

To understand “non-traditional
funding” we need to identify tradi-

Business owners believe that growth opportunities will increase over the next 12 tional funding. Traditional funding
months. While optimism is more favorable than in the past, there still remains a cor- is typically funding received from

relation between economic instability, business performance, and access to capital friends and family, bank loans, asset-
through the eyes of most lenders. Private capital market providers, when anxious,
based loans, and grant funding.
will limit access to capital for businesses that desperately need additional funding When these funding opportunities
for working capital and growth. Many businesses, although conident and forward-
are not available, companies look for
looking in their forecasts, continue to face funding challenges by the setbacks in other funding alternatives, or “non-
their business during the historic decline in the economy as relected in
traditional funding.”
their inancial statements. Although traditional bank lending is im-
Non-traditional funding can be -

funds raised through private equity, proving in part, there still remains a dificult higher cost of capital
angel investors, or by the sale of eq- environment for most businesses to access funding.

uity securities. Investors that focus
on non-traditional funding typically

want to know that there is an exit WHAT DO YOU DO IF YOUR
strategy for their investment. Specii-
ORGANIZATION IS NOT “BANKABLE?”
cally, non-traditional funding is most L SCHRECK
readily available to companies that MICHAENG DIRECTOR
MANAGICAPITAL GROUP
have liquid securities (which means
RESERVE

t t
h h
a a
t t
t t
h
he borrower’s common stock is
p p
u u
b
blicly traded). A typical example

o o
f a non-traditional investment f
would be a convertible debt w

i
investment. In this type of trans-
a
action, a lender invests cash

i i
n
nto a company that is publicly
traded. In consideration for N
ERIC M. STEI
the investment, the lender will COUNSEL
LAKIND
have the right to convert his
SZAFERMAN

investment into shares of common
stock so that the lender can sell the

shares and recoup his investment.
OLOMEI
JAMES E. BART
N.J. PRINCIPAL
ING
HILL, BARTH & K
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