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Hpc And The Small Company

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The bank's treatment of small businesses does not bear close scrutiny, either in the last boom or the current.

The small company is encouraged to borrow on overdraft, not fixed term loan, to "allow flexibility", but the fact that overdrafts are repayable on demand is not over emphasized in the small print. These overdrafts are extended to "promote expansion", but often this "expansion" covers nothing more than working capital, so the small business is under capitalized and this is shrouded by the availability of easy credit.

While the banks are happy to extend these overdrafts to cover ever increasing cash flow problems including tax deadlines, VAT and Corporation Tax being amongst the most stressful, when the customers of the small business (usually other small businesses) have their own cash crises, this has a vortex effect which quickly draws everyone in. One bad apple etc.

But of course these "entrepreneurs", decent risk takers, are mostly trying to improve themselves through fair means, employing others in the process and paying tax and dealing with the ludicrous amount of new red tape in the process.

Thankfully having been lucky since the 1992 recession my business has had no borrowing, but my suppliers often have and some are showing signs of acute distress. There will be enormous personal pain to small company owners over the next few months. Some will have to sell their homes to repay the banks, to reimburse the banks for their corporate stupidity - those people are the lucky ones if they have any equity to assist towards the debt, but where will they live then?

If their homes are repossessed, God help their family lives.

A HPC is inevitable, I think most here accept that. But a by-product is that the banks are currently throwing out tentacles in all directions attacking the easiest targets, to call in money to pay for their mistakes and those of the greedy home-as-profit merchants.

What a shame for the innocents.

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Guest vicmac64
The bank's treatment of small businesses does not bear close scrutiny, either in the last boom or the current.

The small company is encouraged to borrow on overdraft, not fixed term loan, to "allow flexibility", but the fact that overdrafts are repayable on demand is not over emphasized in the small print. These overdrafts are extended to "promote expansion", but often this "expansion" covers nothing more than working capital, so the small business is under capitalized and this is shrouded by the availability of easy credit.

While the banks are happy to extend these overdrafts to cover ever increasing cash flow problems including tax deadlines, VAT and Corporation Tax being amongst the most stressful, when the customers of the small business (usually other small businesses) have their own cash crises, this has a vortex effect which quickly draws everyone in. One bad apple etc.

But of course these "entrepreneurs", decent risk takers, are mostly trying to improve themselves through fair means, employing others in the process and paying tax and dealing with the ludicrous amount of new red tape in the process.

Thankfully having been lucky since the 1992 recession my business has had no borrowing, but my suppliers often have and some are showing signs of acute distress. There will be enormous personal pain to small company owners over the next few months. Some will have to sell their homes to repay the banks, to reimburse the banks for their corporate stupidity - those people are the lucky ones if they have any equity to assist towards the debt, but where will they live then?

If their homes are repossessed, God help their family lives.

A HPC is inevitable, I think most here accept that. But a by-product is that the banks are currently throwing out tentacles in all directions attacking the easiest targets, to call in money to pay for their mistakes and those of the greedy home-as-profit merchants.

What a shame for the innocents.

I agree totally - where is the govt now - throwing lifelines to Northern Rock - I didn't give them permission to take my money.. my taxes. Where is the money to help small businesses caught up in the bankers credit crunch??? I am really starting to think we need a currency backed by gold and a 0% permissable rate of inflation. Backed by a constitution and an act of parliament with a 'go to gaol penalty' for those in Govt who break the rules.

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I agree totally - where is the govt now - throwing lifelines to Northern Rock - I didn't give them permission to take my money.. my taxes. Where is the money to help small businesses caught up in the bankers credit crunch??? I am really starting to think we need a currency backed by gold and a 0% permissable rate of inflation. Backed by a constitution and an act of parliament with a 'go to gaol penalty' for those in Govt who break the rules.

With every passing day, I think a 0% inflation would be optimistic in the coming years... I expect a dramatic deflation; for central bank interest rates to drop (slightly) but for high-street lending to spiral dramatically.

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