STUDIO NOIR · Capital Stack
Where the money comes from at each phase.
“Capital stack” means the different sources of money layered together to fund a business. Phase 1 uses three: Taj’s cash equity, a Chase business credit facility as a buildout bridge, and equipment financing for the assets that walk out the door with the tenant. No landlord TI is assumed. If we get TI, that’s upside.
Phase 1 capital stack
| Source | Amount | Type | Role |
|---|---|---|---|
| Taj Hines cash equity | $84,000 | Founder equity | Primary. Covers legal + lease + buildout + soft launch + reserve. |
| Chase business credit facility (Ink cards + Business Line of Credit) | Up to ~$75,000 available | Revolving credit, personal guarantee | Buildout bridge + emergency reserve. Not planned spending. Used only if a specific opportunity or overrun demands it. |
| Equipment financing (poles, sound, lighting) | ~$11,000 | Asset-backed lease, 36 months | Covers the equipment that walks out the door at lease end. |
| Total capital available at open | ~$170,000 | ||
| Base-case planned spend | ~$95,000 | $84K cash + $11K equipment. Credit facility undrawn. |
Zero landlord TI assumed. Any TI negotiated in the lease is upside that shortens payback and refills the credit line. Not modeled.
No SBA loan. SBA requires 2 years of business history; we don’t have it. Reconsidered in Year 2 for Phase 2.
No outside investors. Not raising equity Phase 1. Taj keeps 100%.
No prepaid Founders’ dues before doors open. See [[feedback-no-prepaid-memberships]].
Backstop, not modeled: Taj holds additional personal capital outside the $84K equity commitment. That capital exists as a safety net but is not part of the operating plan. We do not spend it, do not depend on it, and do not draw from it unless the credit facility is exhausted AND we need one more push to reach cashflow.
What each lever actually is
1. Taj’s $84,000 cash equity
Straight founder equity. No repayment. She keeps 100% ownership.
Deployed across five buckets in [[startup-budget]]:
- $5,000 legal, insurance, trademarks, software
- $15,000 lease deposit + first + last month rent
- $30,000 cash buildout (full buildout scope with no landlord TI assumed; equipment lease covers the assets that walk out at lease end)
- $5,000 signage + soft-launch marketing
- $32,000 cash reserve (4.6 months of fixed opex, untouchable; Chase LoC backstops for a longer effective runway)
2. Chase business credit facility
Two Chase products together. Applied for in Weeks 2-3 of the formation sprint, immediately after Mercury Operating account is funded and the LLC has an EIN. Chase pulls Taj’s personal credit and issues under personal guarantee. Great personal credit qualifies her for both.
Chase Ink Business Preferred credit card - Typical credit line for a founder with strong personal credit + a funded business bank account: $15,000 to $35,000 - Annual fee: $95 - Purpose in the stack: vendor payments, ad spend, small buildout overruns; points economy on real spend post-open - Rules: never a $0-interest balance carry unless promo APR; pay in full monthly once revenue is live
Chase Business Line of Credit - Typical initial line for a new LLC with a strong personal guarantor: $25,000 to $50,000 - Interest only when drawn; typical rate Prime + 1.5% to 3% depending on Fed cycle - Purpose in the stack: bridge for buildout overruns, emergency working capital, opportunity capital (e.g. a spot buy on a design element that unlocks the space) - Rules: never draw more than 40% of the line without written Trill + Taj sign-off; every draw has a repayment plan attached
Combined available credit at open: ~$40,000 to $85,000. Base case for planning: ~$75,000 across both instruments.
Discipline: the credit facility exists to keep the $44K cash reserve untouched. If we run into a $10K buildout overrun in month 2, we draw the LoC, not the reserve. If we need to bulk-order concierge appointments, we put it on the Ink card for points. If either instrument is drawn, retained earnings pay it down before any distribution to Taj.
3. Equipment lease
Poles, sound system, moving lighting fixtures. ~$11,000 principal financed at approximately $400/month for 36 months.
Sourced through a specialty fitness equipment leasing broker (Beacon Funding, Ascentium, or Balboa Capital typically compete on rate for boutique fitness). Rate depends on Taj’s personal credit; expect 8% to 12% effective annual rate.
At month 36, the equipment can be bought out for roughly 10% of original value ($1,100 buyout) or the lease renews. Decision made at the time.
Optional replacement lever if leasing terms come in poor: buy the equipment outright from the $15K cash buildout bucket. Cuts monthly fixed cost by $400 but concentrates capital in depreciating assets. Default recommendation is to lease and preserve cash.
Chase application sequence (Weeks 2-3 of the formation sprint)
Runbook to open both Chase instruments in one 4-week window. Runs in parallel with the Mercury business bank setup (see [[bank-setup-runbook]]).
| Step | Owner | What | When |
|---|---|---|---|
| 1 | Taj | Confirm personal credit score (target 720+) via Credit Karma or Experian | Formation Week 1 |
| 2 | Trill | Confirm LLC formed + EIN issued + Mercury Operating account funded | Formation Week 2 |
| 3 | Taj | Apply for Chase Ink Business Preferred at chase.com/business/credit-cards |
Formation Week 2, day after Mercury funds |
| 4 | Taj | 5 to 10 business days for card decision + issue | Formation Week 3 |
| 5 | Trill + Taj | Book Chase Business Banker appointment at a Raleigh branch for Business Line of Credit application | Formation Week 2, book for Week 4 |
| 6 | Taj | Attend Business Banker appointment with: signed Operating Agreement, EIN letter, NC Articles of Organization, Mercury 30-day statement, personal tax returns (2 years), personal financials worksheet | Formation Week 4 |
| 7 | Chase | Underwriting decision on LoC, typically 2 to 4 weeks after complete application | Weeks 5-8 |
| 8 | Taj | Sign LoC agreement, LoC opens undrawn at $0 balance | Weeks 6-9 |
Total elapsed: roughly 6 to 9 weeks from LLC formation to a live, undrawn LoC.
If Chase declines the LoC (possible for a pre-revenue LLC even with strong personal credit): the Ink card and Taj’s personal capital backstop cover the same role. We do not treat a Chase LoC decline as fatal. Re-apply after 6 months of member revenue on the books.
The rules for the credit facility
- Undrawn is the default. If we open Phase 1 and never touch either Chase instrument, that’s a win. The card sits available; the LoC sits at $0.
- Every draw has a repayment plan attached. Written into the cash tracker at the moment of draw: what the money bought, when it gets paid back, from what revenue source.
- The reserve is still untouchable. The credit facility exists specifically so we don’t have to touch the $32K reserve. If we’re tempted to draw the reserve, we draw the LoC instead.
- No balance carry on the Ink card. Pay in full monthly. Only exception is a Chase promo 0% APR window and only for a specific planned purchase (e.g. a large concierge equipment order that we can pay down in the promo window).
- Retained earnings pay down debt before Taj takes distributions. Cashflow priority: opex → tax reserve → refill cash reserve if drawn → pay down LoC → pay down Ink card → distributions to Taj.
- Personal capital backstop is never confused with business capital. Taj’s personal reserves are outside the LLC and stay outside. If she ever contributes more equity, it’s a documented additional capital contribution and increases her recorded capital account.
Phase 2 capital stack (kept for reference, rewritten in 2028)
Phase 2 flagship is a different order of magnitude: $3.5M to $5M. That capital comes from:
- Phase 1 retained earnings (roughly $50K-$150K if Phase 1 lands at plan for 18-24 months)
- SBA 504 loan through Live Oak Bank (Wilmington NC), the largest SBA lender in the country, once we have 24 months of business history
- Larger landlord TI (Phase 2 flagship deals typically carry $60/sqft+ TI in RDU on a 10-year term)
- Possibly a small outside equity round (10 to 20% of the entity, $500K to $1M) if the SBA + TI + retained earnings stack doesn’t close the full budget
- No preselling of memberships before doors open, ever
Full Phase 2 capital plan gets rewritten in 2028 against real Phase 1 numbers. Details in [[phase-2-capital-plan]] (deferred).
Phase 3 (franchise) capital stack
Franchise unit capital comes from the franchisee, not from STUDIO NOIR IP LLC. Our IP LLC collects an upfront franchise fee ($50K to $150K per unit) and ongoing royalties (typically 6 to 8 percent of gross revenue). No corporate capital deployed to build franchised units.
Full Phase 3 economics in [[franchisor-economics]].
What NOT in the Phase 1 capital stack
- Landlord TI as baseline. We do not model with it. Any TI in a signed lease is upside.
- SBA loan. Requires 2 years of business history.
- Merchant cash advance. Predatory rates, never.
- Prepaid membership dues before doors open. Off-brand, off-integrity, legally messy. See [[feedback-no-prepaid-memberships]].
- Outside equity Phase 1. Taj keeps 100%.
- Personal loan against Taj’s home or retirement accounts. Off the table.
- Family and friends round. Off the table.