Let’s go back in time a bit. At the start of the Covid-19 crisis, governments around the world recognised that businesses, particularly small businesses, were at risk of getting into trouble. The crisis was obviously going to affect the economy as a whole, and some businesses, particularly those in the public space, such as restaurants, were going to get hit hard. And they were.
Despite being below commercial interest rates, the loans turned out to be unpopular with businesses. One problem was that to ensure banks did proper due diligence, the banks were required to take the hit if the businesses failed. That provision made the loans very unpopular with banks. There were big administrative problems too because banks, if I understand it correctly, were prohibited from making a profit on these loans. The result was,k, among others, was told repeatedly by applicants that businesses were being refused the government’s Covid loan but were then quickly offered commercial loans by banks. Pretty cynical. Or, to put it another way, the incentives for banks to participate were negative.
Contrast this with what happened in the UK, which introduced similar schemes. The UK, it turns out, had precisely the opposite problems: huge numbers of applications, enormous payouts and quite a bit of fraud. What was the difference between the two schemes? One big difference was that the UK taxpayer was and remains on the hook for all of the loans that went bad because, from the start, the UK government took on 100% of the risk in at least some of the loan books.
And this is the hardest of all: judging by the failure of these schemes, SA banks’ trust in SA businesses is also pretty low. Why else would you insist on personal guarantees when making a loan technically encouraged and supported by the government?
Because they're unbankable?
You're so right,been trying for years to get funding,they always comes up with reasons why you can't get funds
Small businesses are for blacks, so banks only loan whites(big businesses) I thought you knew this obvious fact
Canada Canada Latest News, Canada Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: News24 - 🏆 4. / 80 Read more »