Yes, believe it or not, this is possible. Some companies are being allowed to use the same collateral twice on different loans.
This sort of loan was originally created to help multinational companies move money internationally if they were already highly leveraged. It’s now being used by companies with significant variable rate loan interest payments that are causing them short-term cash flow problems.
Given the payments now being charged on variable rate loans, this has become a necessity for some. Most only do this as a short term fix, in order to keep their businesses afloat another year or so. At that point, they hope that this period of high interest rates will come to an end, so that their cash flows can again normalize.
Many lenders pursue these sorts of deals, because the interest rates charged on them are high to say the least. These deals also have a higher frequency of bankruptcy losses, and that increased risk is priced into the higher interest rate.
But no amount of lending will correct the underlying problems creating the company’s cash flow problems in the first place. Many of these companies have issues that can’t be fixed and will probably continue to borrow, as long as their lenders allow it.
In other lending news, first time homebuyers are now coming up with larger downpayments. The year-over-year increase was 11.3%.
The average down payment is now 14.71% or $30,434. Take a moment, and let that sink in.
We recently went through a major recession due to predatory lending. At the time, lenders agreed that they would go back to the old days of requiring a 20% down payment.
Now the average is under 15% on residential properties and commercial borrowers are being allowed to double dip their financing.I guess predatory lending is again in fashion.
Am I the only person left in America who thinks there’s something rotten in Denmark? It’s a sad commentary on our times.
Let me leave you with this.
Today is October 16th, the official end of tax season. I don’t know about you, but there’s a bottle of Champagne in my fridge with my name on it.
If you have any unflied 2022 returns with a December year end, that aren’t filed by the close of business today, you’ll face the dreaded Failure to File and Failure to Pay penalties. These can add up to another 50% to your tax liability.
The taxation agencies will also charge interest. I don’t know the exact figure which changes every month, but it’s normally somewhere between 18% and 20%.
Interestingly enough, when they owe us money, the interest they pay is normally less than 3% or 4%. No one at the Service has ever been able to explain this phenomenon to me. I guess they do it just because they can.
If your returns are going to be late, then please don’t stick your head in the sand. The problem isn’t going to evaporate into the sunset like the morning dew.
The IRS is forever. If they don’t collect any taxes owed from you, they’ll be happy to collect them from your estate once you’re gone.
Please get us what we need to complete your returns.
We’re all going to get through this. Let’s get through it together.
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Chris Amundson
President
Accounting Solutions Ltd.
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