A Novel Idea for Putting Sidelined Cash to Work – HBR

Good idea — big company cash hoard to aid the startups cash need with a win – win  —  both sides receive good value.    Cash management and funding.

Excerpt:  Even as the large companies are hoarding cash, many small and mid-sized enterprises are still facing significant challenges and hurdles gaining access to the credit markets. Loans to these companies would help chip away at our alarming unemployment rates—and even more troubling underemployment rates—as well as knock down some of the hurdles that these firms face in executing on their business and growth plans.

The challenge for these emerging growth companies is twofold. First, credit standards and lending rates make it generally difficult to access otherwise very attractive capital available at low interest rates. Second, for small and rapid-growth technology companies, the problem is compounded by the fact that, while rich in intangible assets, they typically lack the kind of collateral (equipment, inventory, real estate, etc.) banks require to secure commercial loans.

What if the idle cash sitting in the treasury accounts of our largest companies could be used as collateral to secure these loans?

Read full article via A Novel Idea for Putting Sidelined Cash to Work – Andrew J. Sherman – Harvard Business Review.

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