Exploitation by Money-lenders
Thousands of Australian small to medium sized businesses are being exploited by the money-lenders.
Small businesses are vulnerable because the business owners and company directors guarantee business loans. That means their homes are on the line. Banks often do not point this out to them and the business owners assume that they will be able to repay the loans out of profits or keep rolling them over.
Lenders see it in reverse
That is not how the lenders see it. The lenders figure that if they need the loan repaid they can sell up the security property. Any default usually entitles the lender to sell the security asset.
The moneylenders target businesses that cannot repay the loans easily. Why? Because those borrowers who cannot repay the loan out of profits are locked into debt for years. Interest accumulates into higher debt attracting higher interest rates. Eventually, when the debt reaches a high a percentage of the home, business premises over which the loan is secured, lenders foreclose.
Debt free is profitable business
These lenders are supported by regulators, politicians and governments alike.
Business borrowers will benefit if they steadily eat away at their debt to eliminate it and avoid picking up more debt in future. Watch gross margins. Buy 2nd hand for lot less. Buy “on discount” whenever possible.
Good Banking is About Customers. Some bankers forget and some never knew! GBAC offers good solutions for those who are battling out-of-control debt. I admit to being biased, but having run three businesses myself I think that paying a little bit for professional loan management advice would save a lot of business failures. That applies particularly now with the world economies teetering on a knife edge of economic uncertainty.
