We hear all the time that new jobs created by America's small businesses are crucial to the economic recovery. The last two years saw a meltdown in the financial system, bailouts of big companies, and a downward spiral in real estate values. Credit is tight if not non-existent for small business, and as a new lender we're hearing that "small business lending" is considered a high risk category when insuring loan funds and/or non-institutional / community bank lenders. It's a real dichotomy isn't it? Touting small business as the solution, while those same businesses struggle to grow (or even survive) because they can't finance their growth with the right match of capital.
Perhaps we need to shift our thinking... If a small business has a good management team, is matching their source and structure of capital (short or long term; debt or equity) appropriately to their stage of growth and size of business, and has technical assistance and an advisory board to guide them, it seems the risk drops significantly. You may be more likely to slip and fall in your bathtub than to lose your shirt to this business...
