Quote:
Originally Posted by pornguy
So basically you are saying that just any ass hat and his brother can go out, Open a business and use only the banks money and a promise..
Well maybe thats where the US went wrong.
how a company can have profits in the BILLIONS and have a cash flow issue or the need to take a loan. If they have no cash flow, and they have to take a loan, then they have no profits.
Take for instance your Boing example.. If they had a 2.2BILLION dollar Profit in 2006 they where is the money. PROFIT means the BILLS are PAID.. Where all that CASH FLOW going.
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In a way yes. Businesses are usually born on credit. If you want to open up a grocery store you have to have the capitol to start it. These means you either need to find investors or get loans. Many businesses need some type of capitol injection to help them grow. There are a lot of businesses (like being an adult webmaster) that don't rely on that. You can start doing this job for very little and if you just work by yourself your expenses are small. However, say you want to start a construction business. At first you just do odd jobs by yourself and you need very little money to start and continue. But if you want to expand you will need some money to hire people, get an office and equipment. If you don't have the money yourself you will most likely turn to a bank for it.
Getting a big business loan from a bank is not an easy thing that just anyone can do. If two guys go into a bank looking for a 2 million dollar loan to start a business and one of them really has never done much in that field and does not present a solid business plan while the other already has people committed to the project, a solid business plan including how they are going to pay back the loan and a good exit strategy the bank is kicking the first guy out and the second guy has a shot at getting the loan.