First of all, thank you for all of the warm and gracious notes I received yesterday about my mild case of Covid-19.  Fortunately, my worst symptom so far seems to be cabin fever.

This morning I have a hypothetical question for you.  If you had the opportunity to borrow $1 million for your business today at a low-interest rate, that you don’t have an immediate need for, would you do it?  The loan has no pre-payment penalty but does have a personal guarantee.

Here are some issues that you might want to consider in making the decision.

  • Do you have a clear picture of what risks your business faces over the next 12 to 24 months, and do you have reserves to cover worst-case scenarios?
  • Can you foresee unexpected opportunities coming up in the future that you might want to invest in, and if so, will you have the dry powder to take advantage of them?
  • Should you need to borrow money in the future for any of the situations above, will it still be available?

The questions above should be answered by all business owners and entrepreneurs when considering the Main Street Lending Program that was extended until December 31st by the Federal Reserve Bank earlier this week.  In short, extra cash can be regarded as an insurance premium.  And you have to decide if it’s worth the cost. For those interested, I will be conducting an Aminar on Main Street at noon EST today.

So, would you borrow the money?