Deemed a Thursday must-read (at least for small business owners and entrepreneurs) by the Wall Street Journal, this article details the impact of Y Combinator, a startup accelerator, including its potential inflation of startup valuations. Some believe these increased valuations—resulting largely from the hype generated from some of the successful Y Combinator startups, including Dropbox, Airbnb, and Socialcam—have made early-stage startups more expensive across the board. Check out the entire article to learn about why investors believe Y Combinator startups are overly priced, and how these valuations are impacting the startup community as a whole.

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While the U.S. economy continues its slow, volatile climb out of the current recession, small business lending jumped to its highest level of 2012 in May. The Thomson Reuters/PayNet Small Business Lending Index rose almost 10 points from April to May. The index measures overall volume of small business financing, taking real-time loan information from more than 250 leading U.S. lenders.

The latest rise is just about enough to compensate for the steady decline over the prior four months. Analysts are noting low interest rates and stronger corporate balance sheets as the likely cause for the credit increases. Bill Phelan, PayNet founder, believes the strong data in small business lending may suggest that small business will avoid the coming economic storm…

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In the first two posts in this series we discussed equity financing and debt financing for your small business. Today we’ll discuss a third option for financing. Rather than putting all your eggs in one basket, many businesses take a hybrid approach to raising capital—taking on both equity financing and debt financing, or a debt-equity financing, such as mezzanine financing. The two forms of financing together can work well to reduce the downsides of each. The right ratio of debt and equity will vary according to your type of business, cash flow, profits and the amount of money you need to expand your business.

Sources of Debt-Equity Hybrid Financing
While not exhaustive, below are the three typical sources of debt-equity hybrid financing.

Mezzanine…

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In last week’s post, I discussed the advantages and disadvantages of using equity financing to raise money for your small business. This week, we’ll take a look at the advantages and disadvantages of using debt to finance your business.

With loans, you generally don’t have to give up any control or percentage of profits in exchange, but taking on too much debt may be a costly burden that stunts the growth of your company.

The Advantages

You don’t give up control. When taking out a loan, you don’t give up any control of your business. The lender, whether a bank or other alternative lending organization, does not acquire the right to manage or oversee how you run your small business, how profits are…

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