...said the headline in the Times.
But what does worst mean? Too little lending by banks. Too little borrowed by businesses for investment?
Apparently not.
Too much borrowed by government was the cause.
So why do we think borrowing is a bad
thing?
Well some politicians say so - not very reliable. It will increase the deficit say others, but not if we use it to grow GDP.
Now I am not an economist but I do know a couple of things.
- The average cost (interest rate) of the borrowing by HM Government during this period was -0.6 per cent. Yes you
read that correctly minus 0.6! You see for every borrower (in this case HM Government) there must be a lender (saver), but because there are more savers than borrowers right now some will actually pay HM Government to look after their money! And they don't want it back, so why don't we borrow as much as we can?
- At a cost of borrowing this low the return on the
investment made with the borrowed money is almost certain to be greater than the cost. And if that investment creates jobs and consumer spending goes up, so does the tax collected by HM Government as well.
Now what does this have to do with your business?
Well quite a
lot actually.
Although you probably can't borrow money as cheaply as HM Government you can still get a pretty good rate - probably under 5% and certainly under 10% at the moment if you shop around - and if you invest in your business in income generating assets your ROI should easily exceed the cost of borrowing.
Now you will need to know your business numbers to work out if the extra
borrowing is right for you, so between now and 18th December I have opened up some slots in my calendar for a complimentary, no obligation telephone call to discuss whether you can borrow funds to kick-start your plans for 2016. Click here to grab one of these slots before they all go. It won't cost you a penny
and it might just make you a fortune!
Noel Guilford
PPS If you know someone who may need to raise finance for their business please forward this email to them.
Noel
Guilford is the principal of Guilford Accounting a small business accountancy practice specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via email at noel@guilfordaccounting.co.uk or by phone at 01244 660866. He is the author of the best selling book 'Figure it
out - an entrepreneurs guide to understanding your business numbers' which you can obtain by visiting http://guilfordaccounting.co.uk/figureit out. His forthcoming book 'Know your business numbers' will be published December.