Skip to comments.Why Is Fed Considering Paying Banks Not To Lend To Main Street
Posted on 07/21/2014 5:39:12 AM PDT by SeekAndFind
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Why pay them to do something they are already doing.
I just finished another fruitless effort to obtain business financing. Started with the bank I’ve been doing business with for 10 years, they laughed.
RE: Started with the bank Ive been doing business with for 10 years, they laughed
What exactly is the problem?
Well, that just means finding real investors.
That means taking a good hard look at King Solomon’s method of investing. Any small business that is taking out loans right now, at a non-fixed interest rate(seems to be the only kind available for the most part) is foolish.
In some ways you should be grateful, because what is coming isn’t going to be pretty.
Banks have never been easy for small business to deal with. Now they have set the borrowing standards extremely high.
You need perfect personal credit, perfect business credit, collateral up to the amount of the loan, and no real pressing need for the money.
All part of the “O” plan to croak America!
Yeah I tried a couple years ago and am glad I didn’t get anything. Business is good but cash flow is the problem
They’re forcing the banks to sit on the piles of cash that the Fed is printing.
Mark my words, they’ll relax the rules in November 2016, and the next president will have inflation that will make the Weimar look like a boom.
Well...”Main Street” is easier to control when it’s destitute, dont’cha know.
Like trying to herd the suburbs into the cities, “corralling the sheep”, so to speak.
Don’t forget trying to “register” all guns for easier confiscation.
Anyone who can’t see what their intentions are, is a fool!
RE: You need perfect personal credit, perfect business credit, collateral up to the amount of the loan, and no real pressing need for the money.
OK, how many percent of small businesses are like that? PERFECT IN EVERY WAY?
One borrows because one needs the money for cash flow and perhaps to expand a business to attract and service additional customers.
If banks are reluctant to lend money even to a customer with a good 10 year record, how the heck is the bank able to pay their depositors interest? How does the bank even make a profit?
There are stories that the Fed is paying banks not to lend money. The only option seems to be merchant loans or factoring. Where you borrow money against receivables.
Business equivalent of a payday loan. If you need $100k to cover payroll until the customer pays the options are limited.
This is a good thing considering that monetary velocity is at record lows:
QE - the mechanism for supplying liquidity to a deflationary market - is intended to improve the flow of money in the system.
The issue comes when the supply of cash becomes "enough" and deflation turns to inflation. It has always been known that the fed would have to "unwind" and that the timing of that unwinding would be critical. the "tapering" was the beginning of that process. The raising of interest rates to discourage more robust lending is the next step. the "excess liquidity" will need to be "drained" from the monetary systems. There are two ways to do that:
1) Sell the assets they purchased and remove the cash.
2) Slow the rate of monetary growth.
It appears as if this is the course of action the Fed is taking.
Yet another assault on the productive sector of society, like Zimbabwe kicking white farmers off the land.
I’m right there with you and totally understand!
My ‘micro-business’ that started 4 years ago this month has now grown into a real ‘small business.’ I am turning away work because I can’t meet the client expectation. There’s just not enough hours in the day and need to actually either hire with the help of an investor or find another working partner.
10 yr old company, profitable every year, last year was the best ever, already exceeded those numbers for this year. good reputation, diverse large base of business customers (no consumer). Demand for services is increasing dramatically because of govt regulation. Minimal debt and I pay my bills.
Yet I can’t get a loan.
I chose to hire and that brings a big set of issues. I won’t ever take a partner. Too many horror stories some of which I’ve lived.
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