Sunday, September 26, 2010
When thing don't make sence...research...
Any idiot can tell you that doesn't make sense. When is the last time your bank turned down guaranteed money that all they had to do was loan it out and make a profit? Yeah; NEVER. When was the last time a small business didn't need money? Yeah: NEVER.
I decided to take a look at the rules and regulations that make it soooooo hard to loan that money. It seems the interest rate the bank can charge is tied to the Federal Interest Rate they are loaned money at and that is tied to inflation. So, if they loan you money at a profit over the 5% the government is charging them and the government rate goes to 4%, they have to ....SHUTTER....adjust your loan interest rate DOWN! Did you hear that....DOWN!
No wonder they needed a shipment of Depends. Anyway, why would they loan us small businesses money at a paltry 7 or 8% when they have forced most of us to borrow on our credit cards at 29+%?
Bet you didn't know these small banks issue credits all their own?
Let me explain how this works for those of you without a business.
A small business gets an order for say 250 printed T-Shirts. The business used to have a "line of credit" with the bank that allowed them to borrow money to buy the 250 blank T-shirts and then pay the bank back at a minimal interest rate in 90 days when they got paid for the T-shirts they printed. However, around 6 - 8 months ago, the banks yanked all lines of credit from small businesses and even demanded immediate payment of some of the loans putting the businesses out of business. So, if you were going to make it, you had no choice but to put the 250 blank T-shirts on your credit card and really, really hope you had no balance and could get your payment in less than 25 days. Otherwise you were now paying 29% or more interest on the money you charged on your credit card and very few small business make that much profit on what they are manufacturing.....
So, why would the banks want to give up that CASH COW they created. Anyway, there is always the Payday Check Stores they can loan money to and make a whopping profit....