Excel Physical Therapy Center is a sole proprietorship owned by Mr.  White who is also the company CEO. Excel Physical Therapy Center is based in Brooklyn, New York City, USA. The business is a private firm incorporated under the laws of United States. The company offers a wide range of physiotherapy services which include orthopedics, pediatric care, aquatics, sports and body massage (Reflexology, hot stone massage, sports massage, Thai massage and deep tissue). The company has been running for three years. The capital structure for my business entails:

Internal equity (ordinary shares) $1,500,000

Retained earnings $600,000

10% redeemable debentures (3 years) $ 300,000

The debentures are to be fully redeemed in one month’s time; this implies that the company will not be indebted by then. The company is seeking additional funding to finance expansion of its the business. This follows a substantial growth of the business over the past three years that has secured a firm client base which is overwhelming our current staff and facilities. Research conducted by the business also reveals an existing potential for more growth. The increased demand for Physiotherapy services in New York have been catalyzed by the ageing population, high number of injuries within the city, the large number persons across all age ages engaging in various sports, a significant number of people with movement and functionality problems owing to associated illnesses and from diverse environmental factors. Also, this has been brought about by the augmented awareness regarding the dangers of ignoring minor movement and functionality problems, including dangers of being over-weight, thus people need to keep fit, learn fresh techniques of restoring and maintaining their health and hence build up their potential.

As the company CEO, I would prefer to go for a commercial loan to finance expansion of my business as opposed to any other existing alternative. This was arrived at after weighing the implications of the various options available (both to the business and its ownership), and following a thorough market need analysis.

There are quite a good number of advantages that will accrue to my business by taking a commercial loan. Firstly, my ownership in the company will not be diluted as it will be the case if I opt to sell an interest in the business to an investor. This is so because, the lender is only going to have rights to an interest return on top of its loan, and not to a share or a profit percentage expected by me as an investor. A commercial loan will allow me to preserve my working capital and cash, since it can be utilized for almost every purpose including repaying an existing debt to evade high interest rates and short repayment term (Morris, McKay & Oates, 2006). A loan allows for flexibility to formulate a loan repayment schedule that suits my needs and access to capital with negligible up-front payments. This will ensure improved cash flow for my business as it minimizes the chances of draining out my working capital. By borrowing a loan, I will be entitled to the equipment that am going to acquire after I get the cash from the financier. The interest payments on my loan will be tax deductible and hence I will have a tax advantage (a tax saving).

However, my decision to borrow a loan has a demerit in that I may lose my personal property in case I go for a secured loan or incur penalties if am unable to honor the repayments needed. In circumstances where business flourishes better than expected and I opt to pay-off my loan in a lump sum, I might be penalized or be charged a premature repayment fee. Also, by going for a loan, am not assured of the total sum needed to finance the expansion of my business, since the lender can only lend a certain sum subject to my current collateral; this might be due to the fact that my existing security is not substantial enough to serve as security (Seidman, 2004).

In case the above option of obtaining a loan fails, an alternative will be to invite a family member(s) to acquire shares in the business. This will bring in additional capital without incurring additional expenses e.g. advertising for shares. Also, the company will not go public and thus it will not be required to comply with the strict regulations of public companies e.g. annual publishing of its financial results and holding mandatory annual general meetings (AGMs).