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Sharkman, you're talking about construction loans (which are specifically catagorized as such) and don't quite fit the profile of what I've been talking about. Also, I don't think you know exactly how things work in the construction industry. It goes something like this; the developer ('owner') typically borrows to buy the lot/site (he gets a mortgage just like everyone else). This is an asset-backed loan. Worst case, he defaults, the bank liquidates the property. Otherwise, he then applies for a construction loan. The bank assess the risks (based on a number of criteria and also uses any equity the developer may have in the property (over the amount he already owes - the money he had to put down - usually upwards of 25% - plus any market gains) as collateral. Still nothing to do with payroll. The developer enters into contractual agreements with the individual trades contractors (excavation, services, framing, drywall, ...). These contractors request/require a specific payment plan from the developer (based on completion levels -like you mentioned) which are quite standard in the industry. These payment schedules usually require a substantial upfornt payment which everyone understands and accepts as normal business practice. Yeah, we all know that the contractor needs to purchase materials and pay his employees to get the job started. Still, not exactly what I would call 'a loan to make payroll'. I understand full well that there are plenty of business that often need and use 'operating lines of credit' due to the nature of their business.

Hey, you're entitled to your opinion, msj, but frankly I personally would be highly sceptical of any company that openly admits that it needs a loan to cover its payroll. Undoubtedly, there are probably exceptional circumstances in otherwise historically healthy companies which warrant further consideration and analysis, but one thing is for sure, I certainly wouldn't be the lender. But the fact that Bush, Paulson, McCain and Obama all so casually mention '...freeing up credit...so that [amongst other things] companies can make their payroll...' is indicative of a mindset that suggests that access to credit is the answer to practically all financial woes including the economy at large. When in fact, it is exactly that mentality that has created this crisis in the first place. Americans (and Canadians for that matter) don't need any more credit (debt). What they (we) do need is jobs that pay sufficient wages (at companies that can actually make their payroll without borrowing) so that they can pay for their non-asset necessities (living expenses) with their own money. What they (we) also need to learn (and probably will - the hard way) is the differance between a necessity and a luxury, and that we simply cannot buy stuff that we don't really need on credit. Debt, whether personal, corporate or government, is not just a number on paper and will not just disappear by shifting the numbers around. Debt is based on the real world and will eventually have to be paid in one form or another. 10 trillion? Ouch, it's gonna hurt.

There are some good reasons for a business to borrow money, startups/'big projects' (based on risk assesment and at the discression of the lender - this is venture capital where risks are more or less inherent and understood), expansion (typically asset backed loans - for equipment and the like) where the business is already profitable, and to purchase materials or product . (Good debt) On the other hand, if a business needs a loan to make its operating expenses (payroll), I got some bad news fer ya; yer business might be in trouble.

The fact that Paulson just said that it will be 'several weeks' before the fed makes its first purchase is proof positive that the panic that he (and the administration) created was intentional (to steamroll the bill through congress). Even just one more week of discussion would probably have produced a number of better alternatives and avoided the panic selloff in the markets.

If your company didn't make enough money in the last two weeks to pay your employees, pray what 'future event' is going to happen in the next two that will enable you to both pay your employees with your own money AND pay back the money you borrowed to cover your last payroll?

Q: If a company needs a loan to make their payroll, isn't that company bust?