companies borrow money to make their payrolls??!!!

[ensho]

when they list all the terrible things that will happen if we don't do the bailout they always mention that companies that need to borrow money to make payroll won't be able to do that and employees wouldn't get paid.

what the hell kind of company borrows money to make payroll?

[Skink]

1. Retailers.

They borrow to buy at wholesale. It's a lot like sharecropping. Investor sharecropping.

[shadowknows69]

4. Most established retailers have accounts directly with their wholesaler's though

A start up will need loan capital but if you're in business for five years or more you better be showing some kind of profit or you don't live long.

[shadowknows69]

2. Some have to in slow seasonal times maybe

But if that's your main business plan, you aint gonna be in business for long. The Republicans just think that everyone can spend millions of dollars that isn't theirs like the government does.

[Yavin4]

3. Companies That Don't Get Paid By Their Customers On A Regular Basis

There are companies that invoice their customers, and it takes a while for these invoices to be paid. Meanwhile, employees have to be paid on a regular basis.

So, companies borrow the money to meet payroll while they wait for their invoices to be paid. Or, they sell their Accounts Receivable to another company, which is just another form of borrowing.

[Demobrat]

5. Companies with uneven cash flow.

If you make down quilts you probably sell more in winter than summer. There are lots of businesses that don't take in the same amount of money each month, small and large.

[Uben]

6. I tried it...........

....I borrowed to pay myself. It didn't work, I still had to pay it back! I knew there was a catch!

[shadowknows69]

7. Lol I kind of did that too

Actually I did borrow to hire an employee but a bad business deal went down and I was wiped out.

[ensho]

9. that's what I was thinking - a never ending circle of borrow/pay

nt

[HamdenRice]

8. Retailers rely on commercial paper for short term credit

Let's say it's October and they're getting ready for Christmas. They use every dime to buy merchandise and then some assuming most of that inventory will make money by Christmas.

They don't want a long term loan (bank) or worse to issue bonds, so they issue commercial paper -- kind of like a post dated check. Investors (mostly money market funds) buy this paper at a discount; in other words, the check will be for $100,000 and will be dated January 15. It will be purchased for $97,000 and the investor will come in on January 15 and get paid $100,000.

[Skink]

10. That commercial paper won't be available after christmas.

Return policicies are about to get draconian. The strong retailers are planning for survival while the rest of the little guys are about to get wiped out.

[Uben]

11. I'm not so sure

There are a lot of people out there, like myself, with money to invest. With the market so low, those needing venture capital will turn to private investors, who may be more than happy to take a risk on a good idea.

As battery technology gets better, we will see things like electric motorcycles becoming feasible, something I am waiting for!

I have the majority of my money in commercial real estate, and it has remained a safe haven here in Dallas. I am thinking about pulling all of my market investments to buy more real estate. I would take a huge hit initially, but it may pay off in the long run.
There are really good deals on real estate right now, and it is the time to buy for those who have the funds. It's the only way I have come up with to recoup some of my recent losses in the market. Although my portfolio is very diversified, the broad drop in prices has taken it's toll.