Misguided Reporting on Forcing Banks to Lend
Banks of all kinds have become popular targets for everyone. No one likes them. Not liking them doesn’t mean not wanting to borrow money from them. Some folks – including at least one clueless small business owner – think that banks should be forced to lend to them. At least one reporter is all over this important story.
I don’t know Ms. Plum and haven’t seen her business plan (which I suspect doesn’t exist), but I can find several very good reasons why no self-respecting bank would want to lend her money.
1. Her name is Summer Plum. This is just one of those hunch things but what kind of businessperson could you be with a name like “Summer Plum?” It sounds like she may be a hippie refugee from the ’60s. They were never good for business, unless you count the wacky tobaccy trade. Trust me – I grew up in the ’60s.
2. The business model is flawed. Ms. Plum’s small business- “Felicitea” – is a combination of organic tea sales and massage therapy. Gosh, can you imagine the backlog of demand for those products and services in our new frugal economy? There must be thousands of unemployed Americans eager to enter this lucrative profession. Maybe Ms. Plum should capitalize by opening a school to train certified “drink this free-range tea while I rub your neck” providers.
3. She isn’t making any money. Ms. Plum claims that she “clears” $600/month in her “business”, which consists of herself and a “small room on the second floor of a men’s tailor shop.” (Doesn’t that sound like a place where a bookie or sleazy detective would work?) Then I laughed out loud when I read this Plum quote:
It’s slow. I mean, it’s not fantastic. I can pay the bills, and I pay them on time, which is an improvement over some months this year.
So let me decipher this “cry for help” statement: In some months this year she paid her bills on time but in other months – also this year – she did not. Seriously Mr. NPR Ace Investigative Reporter, would you want your bank lending money to that business?
4. She can’t afford health insurance. Yes I know, lots of people can’t afford health insurance. But Summer Plum is the only employee of Felicitea. So what happens to cash flow when Summer Plum gets the Winter Flu? (Sorry – I couldn’t help myself.) Do you think that a lender would worry about that? Or maybe banks should be forced to accept “I’m sick so no payment for you this month” clauses in their loan agreements.
There are many legitimate reasons to be upset with banks and their policies. Refusing a loan to Summer Plum is not one of them. I think both the reporter and Summer Plum are deserving of a Fools of Finance award.
What do you think?