Todays bit of News that our illustrious leaders think will sort the economy. Giving us a loan.
Forgive me if i’m wrong but as a business, if i’m in trouble does a loan just not delay the inevitable ?
i’m guessing the theory is that its not actual profitability that is the problem for businesses, it’s cashflow and the short term, my personal view is that it does just delay the inevitable like you stated and leaves the country in another 20 Bn of debt that we have to pay back through taxes. It might save a few jobs in the short term but people will still lay off staff as redundant to try and save money and cut costs.
well, there is the delay argument and the speculate to accumulate.
For instance, we have a proposal that has been accepted for a software project. The client will obviously only pay a small downpayment that isn’t enough to fund the hardware that this project will require to run on. So in good times we would buy the hardware on credit or using our own funds. In todays world we need a short term loan to be able to get the equipment to do the work and no bank is letting any ‘bridging loan’ out the door at the moment.
If, and it’s a BIG IF the people in charge of these funds actually operate how the scheme is meant to run then I think it’s a good thing. The tax payer stands to gain. Unfortunately everyone knows that there will be plenty of businesses that attempt to use this to delay the inevitable, it’s all going to come down to how it is managed. For that, I’m afraid the government has a pretty poor record.
DT.
I thought it was lending people money that got us in the shit the first time around 
Anyway, if the idiots want to throw money around again I’m gonna set myself up in business this weekend. A £1.000.000 loan for wages and investment in equipment should see me settled quite nicely in Alicante by March :lol:
The trouble is the banks aren’t giving companies the credit they need to operate within, so a lot of businesses are suffering big cashflow problems.
My brother ran a coach company that had county council contracts for 5 years and also tour company bookings throughout last year. But he became an early victim of the credit crunch as the bank stopped allowing him to operate with an overdraft, even though he had guaranteed money coming in, and his business was stable, viable and profitable. Because they withdrew his overdraft, and some payments were missed on leased vehicles. The bank put him in a position where he couldn’t operate, so had to close down, declaring himself bankrupt in the process.
Companies are finding it hard to operate because the banks aren’t giving them the financial backing. Hence more and more businesses are going under because of cash flow problems. My brother has unpaid invoices going back 6 months that were for work done for schools, councils and rail replacement work, that more than covered what his comapny owed.
The bank did a very sneaky thing when he closed down… they raided his personal ISA account to cover some of the debt to the bank.
He had since had his bankruptcy discharged.
If you get down to the nitty gritty, any business that has to have day to day operations coming out of a credit line is too close to the edge. I can understand buying stock for the holiday season on credit, or long term capital expenditures being on credit, but just like any legal entity some months of available operating flow should be in reserve.
I do it and hopefully all of you operate the same way. Incoming future cash contracts are no guarantee of payment, as many people and business are learning the hard way. The only safe bet is to keep some liquid cash available to get over the “humps & bumps”
^^ the rainy day pot, it’s been raining a lot recently
DT.
Delay can be a pain. I’ve known local authorities take best part of a year to pay up. HM Gov has politely suggested to ours they try to pay small businesses within 3 months. I’m not holding my breath…
Too much speculation - read Gambling - been going on by all concerned : business owners, banks and financiers imo has lead to an unstable economy.
Back to Victorian values for me. Watch the pennies, keep it keen & keep it solid. Take only the risks you can afford. If I can’t afford to do something with my business I wait until I can. I’ve built from just myself to £1.2M turnover in 7 years growing year on year by something like 20%. That’s good enough for me.
We seem to have a culture of only looking forward a couple of years, consequently we have a need for too many get rich quick schemes that have a tendency to fall over in the slightest adverse wind.
Oh and we also seem to think that we can make money just by moving it around