Summary
Here, in the article, it talks about how our Canadian government is dealing with the loans for many small business entrepreneurs. Many small business owners rely on loans to sustain the company. Now that the world’s economy is plunging, many companies are suffering, and losing their jobs. A situation is shown regarding an entrepreneur, Mr. Abbott, of a logging business. With the economic downturn, Mr. Abbott won’t be receiving much business until summer, meaning he won’t be able to pay his government-backed loan. He asked his bank if he could repay the loan just a few months later, but the government refused.
Connection
This relates to Chapter 15 indirectly. In 15.1, the textbook talks about the people who look use the financial statements, and why. Insiders and outsiders read the financial statement to determine if the business will be able to repay the loan. Two aspects would be looking at their profitability; and their worth and marketability of assets. In the situation in our article, the bank must have looked at Mr. Abbott’s assets before issuing the loan. Now that Mr Abbott will be having trouble to pay back the loan, the bank will have to take his assets, his truck.
Reflection
With the global economy falling, I think that the banks and government should go easier on small business loans. The banks should know with such bad factors now a day, it is definitely hard for small businesses to make a profit. For Mr. Abbott’s case, I think they should have just agreed to let Mr. Abbott pay the interests still, but lay off the actual monthly payments for a few more months. The bank and government has enough money already, so receiving fewer payments wouldn’t affect much. I believe that the government should put some effort into creating a solution for this credit crisis.
http://www.nationalpost.com/news/canada/story.html?id=1343244
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2 comments:
I agree that they should make some leeway for the loans to be paid back by the small businesses to the government or banks. With the economic crisis happening before our eyes, everyone is suffering through it, not just the small businesses, but also banks and the government. Even though the government has a lot of money, it is all owing to the collection of taxes from Canadian citizens. Banks are suffering from many people who are not paying their loans back, but they should be aware that they will receive their money their money back one day. It is useless to just take their assets and to sell it off unless the bank is going through a severe financial trouble. There should be some kind of compromise between the two parties.
The previous blog was written by JOANNA WONG. I forgot to initial it at the end. =)
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