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>if they could get a loan on fair terms that wasn't secured by their personal assets. What constitutes a "fair rate", though? Despite popular opinion, banks a
by navigatesol 8y ago
>if they could get a loan on fair terms that wasn't secured by their personal assets.
What constitutes a "fair rate", though?
Despite popular opinion, banks are pretty damn good at assessing risk. The fact of the matter is, most small business fails. The rates reflect that.
Sweetbridge looks interesting, but the risk falls somewhere, even if more diffuse.
- Alex3917 8y ago> The fact of the matter is, most small business fails. The rates reflect that. OK but if you look at only the small businesses that are going to go on to succeed and be around for the next couple hundred years, they still can't borrow at the same rates as Apple or whatever.
- AnimalMuppet 8y agoBecause nobody knows which ones they are. If the banks knew which small businesses would be around for a couple hundred years, those small businesses could probably borrow rather cheaply today.
- Alex3917 8y ago> Because nobody knows which ones they are. This is obviously correct. But it contradicts the idea that banks are good at assessing risk, if the closest that banks can come is lumping 100% of startups into a 'startup' bucket. If banks really were good at assessing risk then the fact that the large tech companies have access to cheap capital wouldn't necessarily hurt startups, but that isn't actually the case.
- AnimalMuppet 8y agoBanks can be good at assessing risk in general, and still be bad at assessing risk of startups. Nobody is good at assessing risk of startups.