It’s probably natural that a nonprofit lender like CEDF, will encounter a lot of small business owners who are at their limits when it comes to adding more debt to their companies. Even though for many it continues to be a difficult environment to get traditional bank financing, there seem to be a growing number of sources in the “fintech” industry that are happy to make money available. Unfortunately, we often see small business owners stuck in quicksand, trying to get on top of endless amounts of “easy” internet money that was quick to get but very expensive.
One reason borrowing money is so attractive to entrepreneurs (even when they are paying crazy effective interest rates) is that they are even more frightened of selling off a piece of their baby before it grows up to be the super-productive money machine they are dreaming it can become. Yes, equity is expensive. It means paying a share of the profits (more or less) forever. It means having to collaborate, compromise or at least consider that someone else has a say in your decisions.
But is money even the right answer for your business? Here’s a provocative article from TV’s Daymond John who ponders whether debt or equity are even the right questions.