Wednesday, October 19, 2016

How to Issue Bonds for Small Business

From wikiHow:

Corporate bonds are a financial tool that a corporation uses to raise funding. They are an alternative to acquiring loans from a bank or issuing shares of stock. Corporations use the money from bond sales to finance a variety of improvements, like business growth, new factories, or new equipment. When an investor buys a corporate bond, he is essentially buying an IOU from the corporation that is to be paid back after a pre-determined time (the maturity date).

The bond will also typically pay coupon payments, which are interest-based payments made to the bondholder at regular intervals (usually semi-annually). Corporations usually enlist the help of investment banks, which function as underwriters, to organize the creation, marketing, and sale of the bonds.

From Chron, which also tells you how to issue bonds :

Issuing bonds lets your corporation remain privately owned while you raise money to grow your business. You can sidestep most Securities and Exchange Commission regulations by issuing your bonds as a private placement, which lets you sell your bonds directly to investors by following your state’s procedures. Before you can sell your corporate bonds, you must provide information about your bond issue to state regulators. You need to calculate the size of your bond issue and the interest rate before filing the required state documents.

Before issuing bonds, there are some things you probably want to know. Articles from Investopedia may help you with this.

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