Should Main Street Seek Equity over Debt?

February 6, 2013

New York Times blogger Ami Kassar raises an interesting question for the Main Street entrepreneur — debt, or go the venture capital route.

I think the point he misses is most of the companies that go the venture capital route wouldn’t be able to score a small business loan. Venture capitalists don’t stray into the “blue collar” mom and pop businesses such as dry cleaners, restaurants and gas stations.

They want companies with the glittering idea — cash flow be damned.

Perhaps the fledging venture could obtain a merchant credit card advance loan for 33%, but that would assume they have sales.

Another question he doesn’t ask is how the small business lender views equity? Does the fact that there are diverse interests on the board factor into the credit decision?

Very interesting discussion. Let Ami know your feelings here.

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