The online business magazine, Canadian Business.com, discusses the recent brainchild of the private equity firms for small business investing, the Business Development Company (BDC).
The article, Privates on parade, claims the development of this investing vehicle for investors to invest in a portfolio of small businesses is off to a shaky start because of the high fee structures that would diminish the high returns that attract investors to these startup firms in the first place.
For the small business, the BDC is not the shrewdest option for fnancing a startup company. "In fact, small and mid-size companies looking for capital will go to banks first, says Clyde Harrison, founder of Beeland Management Co. LLC in Chicago. That suggests to him that the companies in BDC funds have already been passed over by the banks. 'If you're a private company and you're going for financing, you are going to the bank first. That's the easy way to get money. It's only companies that can't do that that are going to go to a fund for money,' says Harrison." There are cheaper ways to finance a business than through a private equity firm. Debt financing is still the best financing for your business. And because of the historically low rates, now, more so than ever.
posted by Silentman, Henry C. @ 08:33 hours MT(GMT-7)
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