{"id":56471,"date":"2021-06-10T13:23:51","date_gmt":"2021-06-10T05:23:51","guid":{"rendered":"https:\/\/zegal.com\/raise-money-through-a-loan\/"},"modified":"2025-01-22T12:53:28","modified_gmt":"2025-01-22T04:53:28","slug":"raise-money-through-a-loan","status":"publish","type":"page","link":"https:\/\/zegal.com\/en-hk\/use-case\/raise-money-through-a-loan\/","title":{"rendered":"Raise money through a loan"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/zegal.com\/en-hk\/use-case\/raise-money-through-a-loan\/#What_are_my_options\" >What are my options?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/zegal.com\/en-hk\/use-case\/raise-money-through-a-loan\/#How_to_do_it\" >How to do it<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/zegal.com\/en-hk\/use-case\/raise-money-through-a-loan\/#Step_1_Raise_money_through_debt_capital\" >Step 1: Raise money through debt capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/zegal.com\/en-hk\/use-case\/raise-money-through-a-loan\/#Step_2_Raise_money_through_equity_capital\" >Step 2: Raise money through equity capital<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/zegal.com\/en-hk\/use-case\/raise-money-through-a-loan\/#Client_case_study\" >Client case study<\/a><\/li><\/ul><\/nav><\/div>\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-my-options\"><span class=\"ez-toc-section\" id=\"What_are_my_options\"><\/span>What are my options?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>All businesses require capital. Whether it is to start a company, pay salaries, innovate, or spend on marketing, your business won\u2019t be able to grow without any funding. There are many ways to raise capital. It is important to understand the advantages and disadvantages of different types of fundraising and to make sure you use the right documents when raising finance.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-do-it\"><span class=\"ez-toc-section\" id=\"How_to_do_it\"><\/span>How to do it<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-step-1-raise-money-through-debt-capital\"><span class=\"ez-toc-section\" id=\"Step_1_Raise_money_through_debt_capital\"><\/span>Step 1: Raise money through debt capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Debt financing refers to borrowing money from an outside source, such as a bank, with the promise of paying back the borrowed amount plus any agreed-upon interest at a later date. Taking out a loan from a bank typically requires your company to have collateral.<\/p>\n\n\n\n<p>Some legal instruments by which you can take out loans include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/zegal.com\/en-hk\/promissory-note\/\">Promissory Note:<\/a> A simplified loan agreement that records the terms of a loan;<\/li>\n\n\n\n<li>Convertible Note: A debt instrument that converts into equity under predefined conditions.\u00a0<\/li>\n\n\n\n<li>Factoring Agreement: An increasingly popular mode of financing for companies that have been in operation for at least two years.<\/li>\n<\/ul>\n\n\n\n<p>An advantage of debt financing is that it gives the company instant liquidity without diluting your ownership interest. However, note that unlike equity, debt must be repaid at some point. Even during difficult financial periods, your company still has an obligation to pay the interest rates or you would default on your loan. There are typically also restrictions that come with debt financing, such as the requirement that you seek the lender\u2019s permission should you wish to pursue further fundraising activities. This may curtail your ability to raise capital.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-step-2-raise-money-through-equity-capital\"><span class=\"ez-toc-section\" id=\"Step_2_Raise_money_through_equity_capital\"><\/span>Step 2: Raise money through equity capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Equity financing is essentially raising capital by selling shares in your company to investors. There are two main kinds of shares that companies can issue: ordinary shares and preference shares. By default, all issued shares are ordinary shares. Ordinary shares entitle the shareholder to a claim over the income and assets of the company in the event of winding up or liquidation. In some cases, you may want to issue preference shares to your shareholders, which would give the shareholder additional rights and benefits, such as additional voting rights or a fixed rate of return to create certainty on your shareholder\u2019s return on investment (ROI).<\/p>\n\n\n\n<p>Preference shares may be cumulative or noncumulative:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Cumulative preference shares: If the fixed dividend entitlement of any financial year is unpaid, the dividend amount that is owed accrues and must be paid in the future. All accumulated dividends must be paid to the preference shareholders before distribution of dividends to ordinary shareholders;<\/li>\n\n\n\n<li>Noncumulative preference shares: If a dividend is not paid in any financial year, it will be deemed \u201cforfeited\u201d.<\/li>\n<\/ul>\n\n\n\n<p>The benefit of raising capital through preference shares is that unlike a loan, you don\u2019t have to pay a fixed interest rate.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-client-case-study\"><span class=\"ez-toc-section\" id=\"Client_case_study\"><\/span>Client case study<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>Stella Pe from <strong>Pacifictrust Holdings<\/strong> uses Zegal to raise money through loan that legally protects both &#8211; payer and payee.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What are my options? All businesses require capital. Whether it is to start a company, pay salaries, innovate, or spend on marketing, your business won\u2019t be able to grow without any funding. There are many ways to raise capital. It is important to understand the advantages and disadvantages of different types of fundraising and to [&hellip;]<\/p>\n","protected":false},"author":134,"featured_media":0,"parent":55263,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":[14137],"meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":2,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","inline_featured_image":false,"footnotes":""},"usecases":[],"class_list":["post-56471","page","type-page","status-publish","hentry","template-raise-funds"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.8 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Raise money through a loan | Zegal Hong Kong<\/title>\n<meta name=\"description\" content=\"What are my options? All businesses require capital. 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