Welcome to Uncover Wealth Radio, episode 84, where I am speaking about why it’s more important than ever to avoid payday lenders, so let’s dive in.
During these difficult times, it can be very tempting to look towards payday lenders to supplement loss in revenue in our businesses, but I want to implore with you why now is the worst time ever to be considering that as an option. You see, many business owners I’ve spoken to have already had drops in revenue. It’s happening across the board already, in pretty much every single sector. And if you have a drop in revenue, the natural thing to want to do is to try and get more money in. How can I make more money? And you may be looking at things like short-term lending and payday lenders to do that. The problem with those types of lending is that the interest rates are incredibly high, and you don’t know when you’ll be able to pay it back, because we don’t know how long this will last for. We don’t know how long any drop in revenue might last for.
Now, it might be really short-term, because it might be that people are jittery just now, and it may be that that may pass to a small extent for your business. Every business is different, and every setup is different, but it might be for your business that it might pass relatively quickly, and people might start buying again, or it might be for your business that you have to close the doors, and there’s no way that you can serve people until six months time, or even longer. We just have no idea.
So, going to lending that is designed for incredibly short-term periods because they have massive, massive APRs, is really not a good idea at the moment. I mean, it’s never a wonderful idea, but particularly just now, because you don’t know when you’ll be able to pay it back. You don’t know when this will end, and when we’ll get through it, and when your business will recover, and therefore, that is to be avoided at all costs.
Instead, if you are desperate for revenue from… not for revenue, rather for cash, for money coming in, have a look at some of the schemes that are being announced, some of the grant schemes that we’re starting to hear about, and some of the business interruption loans. You can also review your insurance to see if your insurance will cover you for any loss of revenue as well.
Go down those routes rather than looking heavily into something like payday lending. It is of course an incredibly important time as well, to make sure that are no money leaks in your business, there’s no money leaking out. I have a video on money leaks, if you want to check that out, you can do that. I highly, highly recommend that you do that exercise in that video as well. That is going to be very important during this time to stay away from short-term payday type lending as much as you possibly, possibly can. Even though it is very scary, even though it’s very uncomfortable at the moment, do everything you can to avoid those, because they are going to punish you in the short, medium and longterm, if you start going down that route. And I do not want you to have a situation, where a few months down the line, you got this even bigger loan, because the APR’s been racking up, and there’s just no way to repay it. Let’s keep in mind that we want to be putting in place strategies now, that will see us through a longer term, and not putting panics in place at the moment.
Thank you so much for tuning in to Uncover Wealth Radio. I hope that this episode has been useful to you. My name is Annette Ferguson. I’m CEO of Annette & Co, a UK-based accounting firm. I’m a chartered accountant, profit-first professional, income strategist, and profit mentor. And if you’ve enjoyed the podcast, I would love if you want to subscribe to this channel, perhaps leave us a review as well. That would mean the world to me. Your reviews are what helps other people find this podcast, and helps us support as many other business owners as we possibly can.
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