An Equity Line of Credit is the issuance of
slightly discounted common stock in exchange for cash
consideration. This allows a Company with established trading
volume to "draw down" capital over a fixed period of
time. It is highly cost effective relative to the other
alternatives
The key to a successful Equity Line of
Credit is finding an investor that will
not abuse the stock.
There should also be:
-
No minimal draw down requirements
-
Draw down only the money you need
-
No restrictions on any future
financings
-
No termination costs
(Contrary to rumors, "Death
Spirals" are inconsistent with a successful Equity Line of
Credit.)
NOTE: Many companies do not meet the
required trading volume to be eligible for an Equity Line of
Credit. These companies should consider retaining the services
of a credible/experienced Investor Relations, Public Relations
or Media Relations firm.
.
