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It's not the loan that's the issue, it's the loan terms. If the terms are zero or near-zero interest for say 5 years then the effects to the business's bottom
by OzzyB 7y ago
It's not the loan that's the issue, it's the loan terms.
If the terms are zero or near-zero interest for say 5 years then the effects to the business's bottom line would be mute.
If the loan is like some loanshark credit card company charging 27% compound with a three month payback, then yeah, bankruptcy is your friend.
Remember, countries take out huge loans to pay for wars that are paid back over generations, the UK just finished paying back it's loan for WW2 just recently.
These are the kind of loans people/businesses need.
- jamie_ca 7y agoIf a restaurant is making $2m/y gross, with a 5% profit margin, is $100k/yr profit. If they need to take a loan to cover 3mo of missing revenue, that's $500k. If that loan is an _amazing_ 0 interest over 5 years, the owner basically gets to keep his business name, for 0 profit over 5 years. How is this any better than letting the business go bankrupt, starting a new one next year when the dust settles, and working it back up to profitability in < 4 years?