Loan application with thanks to George Osborne

I am grateful to Mr George Osborne for providing me with the text I needed to apply to my bank for a some more loans. There can be no doubt that the bank will support my application with this well thought through and inspirational letter. My bank manager will have no hesitation to provide me with the loans at a record low interest rate and that Mr Osborne and his friends will back my loan application further with some of the recently announced £20 billion in guarantees.

I would like to thank Mr Osborne for supplying the text. You will only find the first couple of pages below but if you want the whole text to submit to your bank, please send me an email. Otherwise, please refer to http://www.24dash.com/news/central_government/2011-11-29-George-Osbornes-Autumn-Statement-full-text and adjust according to your needs.

It is truly fantastic and just when I was giving up hope of getting any money out of my bank.

 

Bank of Generosity

Mega Bonus Lane

Taxhaven SW1A 2AA

Mr Bank Manager

Let me start by placing squarely before your bank and your credit committee the market situation facing our company. Much of our industry now appears to be heading into a downturn caused by a chronic lack of confidence in the ability of companies in our sector to deal with our debts. We will do whatever it takes to protect our company from this debt storm, while doing all we can to build the foundations of future growth.

Today I set out how I will do that:

  • By demonstrating that this company has the will to live within its means and keep borrowing rates low;
  • By acting to stimulate revenues and debts, to make sure those low interest rates are passed on to our customers and suppliers;
  • By matching our determination on our deficit with an active enterprise policy for our staff and with lasting investment in our infrastructure and training, so that our company can pay its way in the future.
  • And at every opportunity helping our employees with the cost of living. 

The central forecast we publish today from our independent Auditors does not predict a downturn in our company. But they have, unsurprisingly, revised down the short term growth prospects for our company, for our competitors and the whole market. They expect revenue in our company to grow this year by 0.9% – and by 0.7% next year.

They then forecast 2.1% growth in 2013; 2.7% in 2014, followed by 3% in 2015 and 3% again in 2016.

The Auditors are clear that this central forecast assumes – in their words – “the market for our products  finds a way through the current crisis and that the Boards of Directors of all companies in this market eventually find a solution that delivers sustainability of our corporate debts”. If we do not, then they warn that there could be a “much worse outcome” for our company.

I believe they are right. We hope this can be averted. But if the rest of our industry heads into a downturn, it may prove hard to avoid one here in our company. We are now undertaking extensive contingency planning to deal with all potential outcomes of the crisis in the market for our product.

Like the Institute of Directors and the CBI yesterday, our Auditors cite the chilling effect of the current instability as one of the central reasons for the reduction in their growth forecast. And I want to thank our Chief Auditor Mr A. Beencounter, and his fellow Committee members, and their team for the rigorous work they have done. Their forecast today demonstrates beyond any doubt that their independence is unquestioned.

But if we accept their numbers we must also pay heed to their analysis. And in addition to the crisis in our market, the Auditors give two further reasons for the weaker forecasts.

First, what they call the “external price rise shock”, “the result of unexpected rises in energy prices and global agricultural commodity prices”. Their analysis is that this explains the slowdown in growth in our company over the past 18 months. The result is that the Auditors have significantly reduced their assumptions about the spare capacity in our company – and the trend rate of growth. And this increases their estimate of the proportion of the deficit in our accounts that is structural – in other words, the part of the deficit that doesn’t disappear even when the market for our products recovers.

So our debt challenge is even greater than we thought because the boom was even bigger, the bust even deeper, and the effects will last even longer. Our company has had the highest structural budget deficit of any major player in our market – and the highest deficit in the entire history of our company since we were established.

This Auditor’s analysis feeds directly through to our borrowing numbers that are falling but not at the rate that we forecast only six months ago.

In 2009-10 our borrowing was £156,000 a year. Last year that fell to £137,000. This year the Auditors expect it to fall again to £127,000. Then £120,000 next year; Followed by £100,000 in 2013-14; £79,000 in 2014-15. Then £53,000 in 2015-16; And £24,000 a year by 2016-17.

However, I can report that because of the lower market interest rates you will offer my company, debt interest payments over my tenure as FD for this company are forecast to be £22,000 less than predicted. The Bank might also like to know – given the economic events described by the Auditors – what would have happened to our debts without the action my management team has taken.

My finance department today estimates that borrowing by 2014-15 would have been running at well over one hundred thousand a year – and my company would have borrowed an additional hundred thousand pounds in total over the period. If we had pursued that path, we would now be in the centre of the company debt storm. The crisis we see unfolding in the market for our products has not undermined the case for the difficult decisions we’ve taken, it has made it stronger.

We held our losses budget on our own terms last year – not on the market’s terms this year. We supplemented the mandate with a fixed debt target – that we would get our company debt as a proportion of our revenues falling by the year 2015-16. To be cautious, I set plans to meet both these budget rules one year early.

That headroom has now disappeared, but I am clear that our rules must be adhered to. And I am taking action to ensure that they are. My company’s current structural deficit is forecast to fall from 4.6% of revenue this year to a current structural surplus of 0.5% in five years time. And our debt to revenue ratio – which is forecast to stand at 67% this year – is now set to peak at 78% in 2014-15 and will be falling by the time I retire in 3 years time.

So borrowing is falling and debt will come down. It is not happening as quickly as we had wished because of the damage done to our comany by the ongoing crisis in the market for our products.

We are going to see our company through the debt storm.

So Mr Bank Manager, thank you for your confidence in the vision of our Board of Directors and I look forward to receiving your funds in my account imminently.

Sincerly yours,

2 comments for “Loan application with thanks to George Osborne

  1. 2 December, 2011 at 10:59

    Hi Dirk,
    it is possible that your touching faith in the efficacy of your begging letter may be sadly misplaced.
    Should the Bank Manager remember all the previous wildly optimistic forecasts of growth in your company, it is likely that on your approach, letter in hand, he will slam the bank doors and run and hide behind the settee.

    • EntBrit
      2 December, 2011 at 11:04

      Allen
      Thank you for your comment and in general I agree but it seems to be working for George. He has gotten everything wrong but has maintained his salary (mine went), his pension (everyone else has lost theirs), his job (approaching 3 million people have lost theirs) and he gets the money he wants. He blames Labour, Europe and soon no doubt China, the US and the United Nations, but at the end of the day he has been running the books for well over a year. So I need to learn from George and stop thinking he does not have a clue – he is obviously much wiser than I am so I am following his lead all the way to the bank :)
      Will let you know if the bank gives me the dosh.
      Dirk

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