(That the Company converts to a public limited company and then provides loan guarantees to a group of investors who have expressed an interest in purchasing shares in the company)
1. .If Company avails the IIIrd option then , first of all it has to take care of almost all things discussed in 2nd option and in addition to this it has to take care of the followings-
2. It has to show its stability to get the confidence towards it so that they can become ready to invest to it.
3. If the company has raised funds through this option then company has to provide loan guarantee for the same that is risky for the company if the investors make default to make the payment thereof ( here it has been assumed that it would be contracted between group of investors & company that if group of investors subscribe the shares of the company then company will provide the loan guarantee to the Lenders on behalf of the group of investor when thy take loan from some other persons or Company etc.)
4. Here company becomes the guarantor that’ s why if the principal debtor become the defaulters either in the payment or repayment of interest or loan respectively, then guarantors becomes the liable for the same. So it is very risky for the Company to avail this option.
Thus in my opinion the company should not go for this option at all as it is very risky and instead of it it may avail the second option that is very good as compared to it.