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It's kind of surprising because personal finance experts are forever lecturing individuals to have 6-12 months of cash on hand as an emergency fund. Maybe diffe
by ForHackernews 7y ago
It's kind of surprising because personal finance experts are forever lecturing individuals to have 6-12 months of cash on hand as an emergency fund. Maybe different rules apply to a business because it can always just declare bankruptcy and restructure?
- gbear605 7y agoJust like lots of individuals aren’t able to have 6-12 months of cash on hand, many small businesses aren’t able. For a lot of restaurants, that might mean savings hundreds of thousands of dollars when a month’s profit might be $2000, so saving all your profits for a decade just to have an emergency fund. (Small restaurants aren’t a good way to make money generally)
- jldugger 7y agoThe difference is that businesses can acquire loans. That was why 2008 was so dire -- the musical chairs game of toxic subprime mortgage made it difficult for banks to lend money. For whatever reason, it's just far simpler for a certain class of small business to piggyback on the repo market, and when that seizes, so do they. This time around the fed has been swatting anything that looks like a credit freeze, and there's no expected deficiencies in the banks themselves.