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And how would they pay back a loan?
by ivanche 2y ago
And how would they pay back a loan?
- vidarh 2y agoIf their business grows at a rate higher than interest, there's no reason why the bank wouldn't be happy to add the interest to the loan. If their business is growing at a rate lower than interest, it's a poor investment and they ought to sell it off and put their money somewhere else. Such as lending it out.
- ag56 2y ago> sell if off To who? How?
- vidarh 2y agoIf you can't find a buyer, then close it down and sell the assets. The point being that if your business isn't capable of raising capital equivalent to 1% of its taxable value, then this generally isn't a reasonable business. The valuation for tax purposes of unlisted companies is the taxable valuation of the company assets excluding goodwill [1]. In practice this usually means the taxable value of e.g. a startup tends to be quite low. [1] https://www.skatteetaten.no/rettskilder/type/handboker/skatte-abc/gjeldende/a-4-aksjer--formue/A-4.015/A-4.016/ https://www.skatteetaten.no/rettskilder/type/handboker/skatt...
- ivanche 2y agoThis is just delaying the payment. OK, let's assume they do it for 1,2,3 years and that the bank is happy not to receive any payment in those 3 years. Now they've accrued interest-on-interest and the more time passes the more they'd have to pay back. So my question remains - one day they'd have to pay it back and on that day they'd have to sell assets and pay 36% tax.
- bryanlarsen 2y agoStandard practice in America is to not pay them back, to hold the loan until death. The estate pays off the loan.