One of the great strengths of the American economy is the constant creation of new companies and the acquisition of existing small businesses. Since most entrepreneurs lack sufficient personal resources to fully fund these new companies, they are faced with the need to raise capital.
Without getting complicated, the choice comes down to debt or equity - and there is good news and bad news associated with each.
The bad news about equity capital is that it is the most expensive form of capital in existence: the good news is that the money never has to be returned, and dividends never have to be paid, unless the company can afford it. When it comes to debt, the good news is that no form of capital is cheaper (even though using high interest credit cards is not all that cheap) but the bad news is that the money has to be given back, and the interest paid, when promised.
Risk and reward are in balance. The rich rewards reaped by successful entrepreneurs reflect the substantial financial risk that every small business owner must take as well as the skill and hard work that are needed to ensure that the business survives and prospers.
Senator Obama please take note!
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