my thoughts on usury: if you don't want to take out a loan, don't get one
I'm thinking of the difference in interest rate and repayment structure between consumer credit card debt and small business loans from a local retail bank branch. credit cards constrained by too high interest. small business loans constrained by too selective acceptance.
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small business loans are not an investment vehicle further, regulation has generally strongly discouraged banks from mingling retail banking / loans with investment grade opportunities. They're formally structured differently because of economic realities in addition to regs.
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I mean this with no disrespect, but have you done a startup? Is this an area you have much experience with?
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have worked at early stage startups before and gone pretty deep on financials of companies of that class. also spent a modest amount of time adjacent to the finance industry via internships at investment bank.
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and if it counts, was a "co-founder" at a brick and mortar comic book store one time in the sense that I was working as a combined store clerk + accountant and assisted the owner with some financial organizing
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Okay, can you lay out the pre-loan financials, tell me what they wanted the loan/investment for, how it would be spent, and what impact that was anticipated to have on revenue?
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in which example? we talking any of the ones i've actually had experience with or a hypothetical? i'm not really sure what you're asking me besides interrogating me to figure out if you can dismiss me or not. if that's the case it would be easier if you just said so
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I want a detailed example of someone that couldn't get financing
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k, here's one from the brick and mortar comic store. shop founded in 2005, operated under original owner until 2009. rough patch happens, three consecutive loss months, store would go under without a loan to covering operating costs until recovery...
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so the person I'm thinking about is one who pattern-matches to high risk and can't get the small business loan, but can't afford (nor should they be willing to) the usurius credit card interest rate. they won't be able to finance their plan at all under these conditions.
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Can you construct a concrete example for me here? The kind of business that would even be viable for a business loan usually has assets it can use to secure the loan if the owner's credit is poor.
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If you're telling me there is a missed financial opportunity in lending at low interest rates and very little upside to people with (speculative?) small businesses that have no concrete assets that can be used to secure the loan I am going to have a hard time taking it seriously
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i'm talking about the class of people who for very good reasons look like poor shmucks to banks and will not be able to get a collateral-backed loan because they have no collateral. i'm saying that for structural reasons some people fall through the cracks
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The market is trying to tell them the thing they want money for doesn't have enough upside if investors aren't interested.
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yes, exactly. that's what i mean by "structural reasons". conventional financiers have good reasons not to make that loan. too high risk (statistically speaking) and too low upside (statistically speaking). there aren't many good alternatives in this case and that kinda sucks
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