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In the fall, DN reported that Swedish consumer loans continue to rise. In 2015, the debts of the Swedes to the enforcement officer amounted to SEK 72.4 billion, in 2019 that figure was SEK 82.7 billion.
And the trend does not seem to be reversing. According to recent statistics from Statistics Sweden, loans for household consumption in November 2020 had a growth rate of 5.8%. But despite the name, it is not primarily consumption that causes people to end up in serious debt.
The Insolvency Association deals with the over-indebted. According to Lisabeth Persson, president of Insolvency West, there are mainly four reasons why people have ended up in such a difficult situation that they seek the help of the association. The most common causes are divorce, unemployment, long sick leave, and corporate bankruptcies. Often in combination.
Despite the crisis, it is true that the number of bankruptcies was unusually low in 2020. During the January-November period, bankruptcies decreased by 3 percent, according to the Swedish Agency for Economic and Regional Growth. At the same time, the 5,529 bankruptcies recorded during the period affected small businesses the most. According to credit reporting company Bisnode, companies with up to 10 employees accounted for up to 80 percent of bankruptcies during the year.
You run the risk of being a severe blow to the people who have run companies, even privately. According to Lise-Lotte Argulander, an expert in labor law and work environment at the Företagarna trade association, it is common for the self-employed to obtain private loans in order to invest more money in the company.
Lise-Lotte Argulander, expert in labor law and work environment for entrepreneurs.
Photo: Oskar Every
– We do periodic surveys on financing and we know that it is very common to mortgage your house and take out a loan privately in order to finance the business, he says.
– There can be problems when business goes bad and like now in a pandemic when you really don’t know when it will go well again.
She fears that It becomes a time for many small business owners right now. They have low costs and income, while banks are reluctant to lend to troubled companies. So it can be tempting to mortgage your home in the hope that you can get through the winter until the crisis passes. But whoever does it takes a great risk.
– So you risk your private finances in a different way, if you have mortgaged your house, you may be forced to sell it, says Lise-Lotte Argulander.
The problem for many freelancers, and this must be respected, is that they are really passionate about theirs.
Arturo Arques, a private economist at Swedbank, advises everyone to keep home and business separate.
– Distinguish between the finances of the company and their own. Things going badly for the company is bad enough, but also going into personal bankruptcy is like going from bad to disaster, he says.
At the same time, it can be Easier said than done. Lars tells DN how he couldn’t tell the difference between himself and his company. They were one. He felt it was harder for him to bankrupt the company.
– The problem of many freelancers, and it must be respected, is that they are passionate about theirs. You are so focused on day-to-day operations that you neglect business planning and your own personal finances, says Arturo Arques.
Arturo Arques, private economist at Swedbank
Photo: Vilhelm Stokstad / TT
Lise-Lotte Argulander agrees.
– We know that the reason to start your own company is because you have a drive and a belief in what you do. You want to be able to decide for yourself what you want to do, he says and continues:
– They care a lot about their company, but they also care a lot about their staff and are second to none. It can affect how you feel, especially like now in this pandemic when you don’t see any relief.
They do not always know where to turn, it is difficult and they are ashamed
When it finally is There is no choice but to go bankrupt, former small business owners can be left without business and income, but with large private loans.
Arturo Arques strongly discourages taking out private loans to put the business through difficult times.
– It is rare that more loans solve profitability problems, it is just a matter of postponing the problem. The money is borrowed for investments, not to cover losses or operating costs, he says.
It is still too early to say what the crown crisis will lead to, but there is a risk that private debt overhang will be discovered much later.
– Many of those who contact us have been in debt for a long, long time. They do it when they finally have the strength. They do not always know where to turn, it is difficult and they are embarrassed, says Lisabeth Persson and paints a gloomy picture.
– A lot of people get sick from this. They end up outside the community and it is very difficult to get back up.
Read more:
The giant industry that lives off buying the debts of the Swedes
A record number of young people seek help for their debts
“I am condemned to financial ruin”
