You don’t have to look far every day for flashes of inflation. It seems that everything costs more from building materials to electronic components. One very visible sign is the report that existing home sales are 24% higher than in the first quarter of 2020.
One area where there is absolutely no cause for inflation jitters is the cost of money. Businesses in the midst of seeking capital, whether it be debt or equity, can attest to this. In part, thanks to the Fed, money has never been cheaper or more plentiful. And some at the Fed are talking about raising interest rates as late as 2023. The simple fact remains the supply of capital far exceeds the demand.
This results in an ideal situation for those seeking money. However, there is a booby trap. And, ironically, it has been fashioned on the demand-side thanks to business decision-makers focusing far more on price and structure than compatibility with the capital provider. They should be wary about cutting a great deal without considering what the longer-term relationship will bring particularly if the capital seeker’s business does not play out fairly close to the plans presented at the outset. Life is too short for a borrower to be exposed to such a booby trap. Don’t let it happen.
Our mission at Capital Access Partners is to prevent that from happening to our clients. We are firm believers that businesses seeking capital of any kind should pay maximum attention to compatibility with their capital providers. Optimal Pairing™ = Optimal Results.
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