Slow Motion Business Failures Have Started

"ranwhenparked" (ranwhenparked)
03/18/2020 at 16:52 • Filed to: None

I have had the first few customers requesting to defer loan payments today, as they do not have the cash on hand to make them. Granted, they won’t necessarily fail completely if they go into default on one loan, but it is a warning sign. One is a craft distillery, bar shut down, no revenue; the other is a packaged foods manufacturer (they are most likely done for, their supply chain has been so disrupted they couldn’t resume operations even with a flush account, they’ve been surviving quarter to quarter, the owner has kept them afloat with her personal assets and those are tapped o ut ).

Its not that we won’t grant deferrals , it’s that this bank has an antiquated and highly Byzantine process for them, and basically treats them like a new loan application. We need all new financial documents, etc. The whole process could take a week, and these folks need an answer by Friday.

Its things like this that make me a little happy this is my last week here, even though next Monday is a terrible time to start a new job.

DISCUSSION (15)

The Snowman > ranwhenparked
03/18/2020 at 17:09

The bank I work for is waiving all late fees on the consumer side and bending over backwards to be nice since our name has been deservingly dragged through the mud the last few years. Not sure what the business side is doing as I don't support that side of the bank.

Deal Killer - Powered by Focus > ranwhenparked
03/18/2020 at 17:26

I’m in the residential appraisal business. So far, we are swamped with work, due to the low interest rates. I turn down more work than I accept, as I can complete only so many reports per week. But, we expect the housing market to just stop, very shortly. People being laid off for weeks/months will dry up buyers real quick. Fannie/Freddie are considering going to just exterior appraisals, but we don’t know when/if that will happen. If lenders will accept the risk of a drive-by appraisal, why not just do an AVM and cut appraisers out altogether?

Going through peoples homes at this time is risky, for me and the home owner. How would I know if I’m carrying the virus if I’m not symptomatic? I walk into 5 - 10 homes per week. That’s a lot of potential risk right there.

ranwhenparked > The Snowman
03/18/2020 at 17:35

The retail side has been told to be as flexible and accommodating as possible - waive fees, approve overdrafts, allow more business to be done via drive thru, etc. But, the message hasn’t gotten ti other departments. Business banking is frustratingly slow and cumbersome under normal conditions, and they aren’t waiving any underwriting or documentation requirements or streamlining any processes. We can handle deferral requests for May or June, but for March and April, forget it, not enough time for the back office to turn it around.

And the back office is a shitshow under ideal circumstances and has been basically unresponsive since everyone switched to work from home. Anything I can do myself in the branch is getting done, anything I have to go through a nother department to accomplish has totally ground to a halt. And the trouble is I'm the one customers can get to to yell and complain, the ones holding shit up are at home watching Netflix in their underwear right now.

BrianGriffin thinks “reliable” is just a state of mind > Deal Killer - Powered by Focus
03/18/2020 at 17:39

Damn, I never even thought of that. I talked to my neighbor / plumber today, who said the same thing - like, WTF is he supposed to do? Work? Don’t work? It’s a double-edged sword for people who are small businesses. There’s a huge likelihood this is going to be as bad, or worse, than 2008, and perhaps much longer lasting as supply-chain has been so hugely disrupted.

BrianGriffin thinks “reliable” is just a state of mind > ranwhenparked
03/18/2020 at 17:41

Good news - my employer (coughUncleSamcough) has basically said - hey, pay us whenever, or don’t, it’s all good - for the time being.

ranwhenparked > Deal Killer - Powered by Focus
03/18/2020 at 17:41

We raised our rates a bit just to slow things down, we got swamped with more than we can handle and need time to catch up. Right now, a HELOC is about 6 weeks to close.

notsomethingstructural > The Snowman
03/18/2020 at 17:47

i wonder what bank you could possibly be talking about

Distraxi's idea of perfection is a Jagroen > ranwhenparked
03/18/2020 at 19:51

This is going to be a recession like none we’ve seen before - not in terms of severity necessarily, but in that we’re goi ng to see a lot of basically healthy businesses go to the wall thr ough transient effects even though they have demand, while at the same time businesses which serve the crisis are gro w ing like crazy in probably unsustainable ways . It’ll be really interesting to see how it plays out (for “m ay you live in interesting times” values of interesting).

Deal Killer - Powered by Focus > BrianGriffin thinks “reliable” is just a state of mind
03/18/2020 at 19:52

Yeah. My wife and I are thankful for that. We finally hit a six figure income after years of just making due, then got hit with a $5k tax bill because we get our health insurance thru the exchanges via the ACA. Apparently we received too much in aid and have to repay it.Yet again health insurance is kicking my ass. At least we can defer payment and keep our cars cushioning the bank for a while.

My bird IS the word > ranwhenparked
03/18/2020 at 20:01

Can confirm: started a new job. Training requires classes/travel. Travel banned.

Fortunately its a government job so everything is ok.

ranwhenparked > Distraxi's idea of perfection is a Jagroen
03/18/2020 at 20:02

I think in terms of severity, this will be as bad as the Great Depression, and maybe worse. If the shutdowns last longer than a month, we will absolutely see unemployment well into the double digits. It could easily peak in the 20-30% range. Its unprecedented, because it could be reversed immediately, but doing so will guarantee hundreds of thousands of deaths. This is basically the first time that we’ve ever had to intentionally put ourselves into a depression in order to solve another problem.

Distraxi's idea of perfection is a Jagroen > ranwhenparked
03/18/2020 at 21:06

Its also one which governments can likely substantially ease - or even prevent - by firehosing enough money soon enough. In the long run, it’s going to be cheaper to subsidise businesses massively for a few months to keep them afloat and paying their idle staff than it is to pay millions of people unemployment benefits and deal with the other social consequences for several years as we struggle back out of the hole.

Of course 9 out of 10 global governments e ither aren’t going to see it that way or aren’t goi ng to be able to get their acts together quick enough .

ranwhenparked > Distraxi's idea of perfection is a Jagroen
03/18/2020 at 21:18

I think that will work only if this is fairly brief . If companies think this is going to be long term, they’ll sock away the money in rainy day funds to get them through, rather than pay all their workers to stay at home and do nothing for a year. This isn’t going to be a few months, the talk is that people over age 70 and those with chronic health conditions will not be safe until there’s a vaccine, we have to keep this up until then or else upwards of 7% of them will die.

And that’s assuming we can even develop a truly successful vaccine for a coronavirus at all.

farscythe - makin da cawfee! > ranwhenparked
03/19/2020 at 00:53

over here the first businesses to fail were taxi companies.... there was nothing slow motion about that tho... they were almost immediately in the shit soon as the gubment shut down the pubs and restaurants

i dont know how many of them will make it through this...

good news for uber i guess...:S

pip bip - choose Corrour > Distraxi's idea of perfection is a Jagroen
03/20/2020 at 05:43

recession?

here comes the depression