So does that mean all these businesses were always doomed to fail anyways, just living on borrowed money/time, and now the bill comes due, they’re all fucked?
Simplified: If you can borrow 1 Million USD for 0% apr and earn 1000 USD with that, you have 1000 USD in profits.
Now change the apr to 5% and you are 49,000 USD in the red.
So does that mean all these businesses were always doomed to fail anyways, just living on borrowed money/time, and now the bill comes due, they’re all fucked?
Simplified: If you can borrow 1 Million USD for 0% apr and earn 1000 USD with that, you have 1000 USD in profits. Now change the apr to 5% and you are 49,000 USD in the red.