In an article on Forbes, Circle Up founder Ryan Caldbeck, reviews the cost of capital in different forms. He articulates that debt financing has been hard to come by in past years. Especially for smaller firms. He furthers this by highlighting the caveats of personal guarantees; bank covenants and perspective equity participants may bring to the table.
To quote the author;
While both debt and equity have their pros and cons, with the availability of debt financing for small businesses at anemic levels, we believe crowdfunding fills a critical void for small businesses. Unfortunately for some industries it is historically difficult to find equity investors. Crowdfunding helps create efficiency in the market by connecting high quality companies with great investors.
As we have vocalized (among many others), small businesses are engines of growth for the economy. Crowdfunding has the potential to generate great efficiences in the allocation of capital – beginning in 2013. So we commend CircleUp – and the many other crowdfunding startups preparing for the next step in capital raising for small businesses and entrepreneurs around the globe.