Financing Models: Original Viablility Needs to be Recaptured

One of the biggest problems with today’s financing models for capitalizing small and large businesses (as well as consumers) alike is that the  expectation to pay back debt seems to escape a large percentage of the eager borrowers (and some lenders).  Furthermore, even the Federal government and banks seem to be treating the dollar like it’s “Monopoly Money” these days, with all of the excessive bailouts using “Fiat” money as the source.  And with the securitization of subprime loans and other instruments that have been used  by lenders lately to handle shaky loans, there seems to be less concern about debt repayment by the lenders and more concern about passing it on in securitized forms to unsuspecting others to glean additional profits.  But at a macro level, the financing models can become viable again as long as entrepreneurs, consumers, and other borrowers keep in mind that they (as borrowers) are still expected to pay loans back and that the final lenders still expect the original borrowers to repay the loans back at some point in time; and, most pointedly, declaring bankruptcy should NOT  be viewed as a viable (or desirable) instrument for handling risk by anyone.

Note:  This writeup was originally written as my comments per fellow LinkedIn member Ren Carlton’s recent blog article “Financing- Is it Really Worth It?”  (see  http://www.businessrealityblog.blogspot.com/ ).