I met up with a client I hadn’t seen since June (2008) as I have been crazy busy. Back then he wanted to get his finances in line so he could buy the building in which he operates his auto service business out of.
Back then, we discussed how he did not qualify for a loan ($1 million) to buy the building. Not only did he not qualify, but he did not have the proper accounting structure to present substantial financial data to any lending institution.
I had been working with the SBA in Los Angeles where they also determined he did not qualify for a million dollar loan.
Long story short-someone qualified him to buy the building, which he did buy and now is three months behind in payments!!
Come on people!! You know better than some laon shark, I mean some loan officer at a bank.
This story relates to another blog I wrote about American Capitalism. Someone at a bank lent him the money knowing very well he did not qualify.
Because there is commission tied to this deal and if the borrower defaults, the bank gains an asset.
Hello. The asset is not worth fair market value!!
Why are we lending people money who cannot afford it?
Better question: if you know you do not qualify for a loan, why do you take the loan?
You are better off “managing” you business better than you have been.
Ladies and gentlemen, there are better ways to manage your business financial posture. Stop taking loans!