I’m currently outlining a proposal for potential investors, seeking a $5,000 loan dedicated exclusively to tool and equipment procurement for my business. It’s important to note that the business operates with remarkably low overhead costs. In formulating a fair proposal and repayment plan, my initial idea involves initiating repayments 90 days after the business launches, with a repayment structure pegged at 30% of the net profit. However, I’m exploring what would constitute an equitable and enticing return on investment (ROI) for potential investors, considering the business’s lean operational expenses. What percentage of ROI should I propose to ensure it aligns with fairness and attractiveness to potential investors?
Agree with a previous commenter on a bank loan. It’s quite a low amount of money to give away equity for.
I wouldn’t be giving any equity away. He’s essentially buying all the tools and equipment that I need and I’m going to use my profit to pay him back. I guess it would just be easier, for us to agree to a set amount and pay it back monthly….🧐. I’m really just overthinking things. I’m just going to present what I got and see what he says…🤷🏼♂️
Not my main area of expertise, but 1. For that amount you might want to try a bank loan, 2. In very simple terms investors are constantly evaluating opportunity cost; meaning the return from lending you the money needs to be greats (as well as faster and less risky) than alternative investment options; so, at the very least you should be giving a return greater than if the investor simply put the money in the bank and let it accrue interest for the same period of time