LETTER: Bounce-back loans likely to cause businesses to crash
Most small businesses don't make an actual profit, but provide a living for the owner and their family, as well as providing a service and employment
05 May 2022 - 14:00
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SA's so-called “bounce-back loans” are doomed to failure through fraud and default, as the UK has found out — it is now writing off billions of pounds of similar loans.
Most small businesses don't make an actual profit, but provide a salary or living for the owner and their family, as well as providing a service and employment. If that business lost income through the pandemic, riots or floods, that income will not be made up on restarting the business.
At best the business will perform only as it did before the event. How, then, even with the best will in the world, will it be able to repay loans, especially with interest at prime plus 6.5 percentage points? The loans will either not be taken up, or will not be repaid.
Sydney Kaye, Cape Town
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: Bounce-back loans likely to cause businesses to crash
Most small businesses don't make an actual profit, but provide a living for the owner and their family, as well as providing a service and employment
SA's so-called “bounce-back loans” are doomed to failure through fraud and default, as the UK has found out — it is now writing off billions of pounds of similar loans.
Most small businesses don't make an actual profit, but provide a salary or living for the owner and their family, as well as providing a service and employment. If that business lost income through the pandemic, riots or floods, that income will not be made up on restarting the business.
At best the business will perform only as it did before the event. How, then, even with the best will in the world, will it be able to repay loans, especially with interest at prime plus 6.5 percentage points? The loans will either not be taken up, or will not be repaid.
Sydney Kaye, Cape Town
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
JOHN DLUDLU: Small businesses need more than just loans to bounce back
‘Bounce Back’ billions on offer
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