Vision Circle

There are some basic principles at work: "It takes money to make money," for example.

While debt is not the best thing for a new business, if taking on that debt can lead to the generation of cashflow and profits, it is a good thing.

There is also another principle that is at work: "borrow money when you don't need it so you have a repayment history for when you do need it." The SBA program offers loan possibilities that businesses might not be able to get on their own. But the successful repayment of an SBA loan goes a long way towards establishing a good relationship with some banks so that in the future, you can get loans on your own.

Small business not only lack equity financing (long-term, high risk) but also working capital (short term, low risk). They need both.

There is no guarentee that browing money will lead to generation of cashflow and profits. You only hope that it will.

To your last point, establishing a credit history is not a sound idea for the long term. It gets the owner(s) into the habit of borrowing money rather than justifying outlays of money in the first place. I would rather have a line of credit than taking out a loan.

I agree: Debt is not a good thing. But debt is sometimes the only alternative. Then it is a good thing (compared to not having any money for working capital).

A line of credit is a good thing -- particularly if you are good at avoiding using it unless absolutely necessary. For all intents and purposes, a line of credit requires the same things that a loan does.

The thing that I think you are missing, Ed, is that a credit history is critical to getting the line of credit. So, sometimes you borrow when you don't absolutely need it in order to demonstrate your financial management.

At certain levels, debt is superior to equity: with debt, I'm not necessarily giving away some piece of my upside; with equity, I am. Debt that is convertible to equity is also a good thing.

But your point is well-taken: small businesses rarely have enough finances in place to survive the early years and the failure rate is quite high because of it. If an SBA loan prevents that failure, it is a good thing. If Bush is responsible for making more SBA loans available to smaller businesses, that is a good thing. I don't think Bush has done his part of the equation.

Interesting. I'm thinking about what I might need to take my business to the next level. I think establishing a secured line of credit is going to be my first move, just to get the ball rolling with my bank. I'd like to get to the point where I can reduce the time I pay sub-contractors to an almost salary-like situation. Since my AP gets rather large, this might be a good idea.

The last thing I want to do is get into debt. I hate the idea with a passion, but part of my lousy credit has to do with the fact that I never really pursued credit.

Anyway there's some discussion about the SBA in the big doc here. http://www.visioncircle.org/archive/Race1998.pdf

It's interesting that this is at the top of the agenda with Clinton's racial initiative. Why would it suddenly be a bad thing when Bush trumpets the same program?

It's interesting that this is at the top of the agenda with Clinton's racial initiative. Why would it suddenly be a bad thing when Bush trumpets the same program?

I got into credit troubles before, so I have an adversion to credit. I'm not saying it got to the point of "credit repair," but I was spending way too much of my monthly income paying off credit card bills.

When my company was running, I kept everything on a virtual cash basis. If I couldn't pay for it with the money in the business account, I didn't get it.

But I did have a decent line of credit. That existed only because I was told that the line of credit is a way to show the business was making money. I didn't and still don't understand that one.

But to the point: it doesn't matter if the proposal was Bush or Clinton, I still think it's not a good idea. Of course, my business was a one man operation, with no overhead.

lol

lol

Black businesses fail because they are [black] businesses.

The color of money is green. When you are in business, your in business to make money. We must be aggressive and have tenacity in regards to going after funding for what will fuel our future success.
Integrity is key, as well... We must always re-invest in our communities.

However, first we must do business.(Period)
This is a capitalistic society we live in and we must utilize the resources available in order to change the conditions of our immediate environments.