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The credit crunch lands at my door.
Alan_M_2
Posts: 2,752 Forumite
A couple of weeks ago we had our bank manager in to see us to extend our facilities to get through all the nonsense that's currently going on.
As a wholesale supplier of stone tiles and granite counter tops to the industry we've been heavily hit by the collapse of MFI and the slowdown in general.
Our customers are the fitters who install, many of them have 10 + installations backed up awaiting the arrival and fit of new kitchens to replace the "Lost" ones.
As a result we're a little slow, but ticking over just at a reduced rate.
We need to restock in February (three containers of material - circa £65K) which we're struggling with due to slow business in January. This is where the bank were to help or so we thought.
They came along, made all the right noises, talked about how difficult times were blah blah but they'd like to help....great.
We get letter on Saturday morning basically withdrawing our facilities....nice.
They've panicked basically, they came to see us, evaluated how much value of stock we have here (all paid for) calculated it 's more than we owe them and worked out they can get all their money back by calling it in and making us sell. Effectively stopping us trading. As our loans are secured on personal property we have no choice but to pay them off and trade down whilst we seek alternative funding.
We get the feeling the bank is going through the motions but simply not wanting to lend unless they have ridiculous amounts of security (all our lending is already secured).
So I need to find alternative finance to get the stock in so we can continue trading.
We can refinance with further secured lending, the problem with this is the amount of time it takes to arrange and the cost involved, we went through this process last year, our facilities were authorised in May and by the time LloydsTSB had got all the paperwork organised through solicitors, it had cost us over £3000 in fees and taken three months (we got the drawdown in August).
The alternative is we apply for the government backing that's on offer, they require our end of year accounts, have multiple commitees to process it through and again the turnaround time for this is 4 months + (realistically 6 months)
So we're looking for alternatives, traditional stock finance is not interested, and even if they were their rates are so high it's not viable. (think 40% apr!).
So anyone out there in the Finance industry offer any advice or suggestions? Short term we're looking for £65K to keep the stock flowing and us operating, but we are open to all possibilities including equity investment.
Any questions/interest then PM me or email via my website (click on avatar on left for link)
As a wholesale supplier of stone tiles and granite counter tops to the industry we've been heavily hit by the collapse of MFI and the slowdown in general.
Our customers are the fitters who install, many of them have 10 + installations backed up awaiting the arrival and fit of new kitchens to replace the "Lost" ones.
As a result we're a little slow, but ticking over just at a reduced rate.
We need to restock in February (three containers of material - circa £65K) which we're struggling with due to slow business in January. This is where the bank were to help or so we thought.
They came along, made all the right noises, talked about how difficult times were blah blah but they'd like to help....great.
We get letter on Saturday morning basically withdrawing our facilities....nice.
They've panicked basically, they came to see us, evaluated how much value of stock we have here (all paid for) calculated it 's more than we owe them and worked out they can get all their money back by calling it in and making us sell. Effectively stopping us trading. As our loans are secured on personal property we have no choice but to pay them off and trade down whilst we seek alternative funding.
We get the feeling the bank is going through the motions but simply not wanting to lend unless they have ridiculous amounts of security (all our lending is already secured).
So I need to find alternative finance to get the stock in so we can continue trading.
We can refinance with further secured lending, the problem with this is the amount of time it takes to arrange and the cost involved, we went through this process last year, our facilities were authorised in May and by the time LloydsTSB had got all the paperwork organised through solicitors, it had cost us over £3000 in fees and taken three months (we got the drawdown in August).
The alternative is we apply for the government backing that's on offer, they require our end of year accounts, have multiple commitees to process it through and again the turnaround time for this is 4 months + (realistically 6 months)
So we're looking for alternatives, traditional stock finance is not interested, and even if they were their rates are so high it's not viable. (think 40% apr!).
So anyone out there in the Finance industry offer any advice or suggestions? Short term we're looking for £65K to keep the stock flowing and us operating, but we are open to all possibilities including equity investment.
Any questions/interest then PM me or email via my website (click on avatar on left for link)
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Comments
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Kind words butter no parsnips however I am sorry to hear of your difficulties................................I have put my clock back....... Kcolc ym0
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I would speak to as many banks as you can ASAP.
If they don't want your business others may.0 -
I'm very sorry you find yourself in this position AlanM.
It's the problem when banks find their balance sheet squeezed they want cash. In this case they feel they can extract it from you and that's what they're seeking to do.
The Labour Government is making this sort of thing a political issue (misguidedly IMO as it'll bite them in the bottom) - you could try to go to your local MP to see if some arms can be twisted.
As Really2 says, shopping around could bear fruit.
Could a short term loan at a higher rate of interest that can be sorted quickly and the refinanced help (the jargon is 'A Vorderman' I think)?
I hope you get things back up and running properly soon.0 -
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Could a short term loan at a higher rate of interest that can be sorted quickly and the refinanced help (the jargon is 'A Vorderman' I think)?
I hope you get things back up and running properly soon.
Approaching other banks leaves us with the same problem organising more secured lending, the time it would take to change over, get the security off the existing property, swap the security to the new bank, provide all the relevant financials they require (our year ends 31st Jan and they need this years account).
The calling in of the facilities has truncated any time we had available. We feel a bit frustrated as in hindsight, we should have bimbled along and asked other banks and swapped over, in which case it wouldn't have mattered if it took 3-4 months...as it is now we have 8 weeks until our facilities are reduced, then a further 4 months for it all to be paid back....
The short term loan idea would work, but there's just not enough lending value left int he property, there's enough real equity, but the amounts which a bank consider equity and what they actually are are different in a falling market.
It's all terribly frustrating and actually quite worrying.0 -
Approaching other banks leaves us with the same problem organising more secured lending, the time it would take to change over, get the security off the existing property, swap the security to the new bank, provide all the relevant financials they require (our year ends 31st Jan and they need this years account).
The calling in of the facilities has truncated any time we had available. We feel a bit frustrated as in hindsight, we should have bimbled along and asked other banks and swapped over, in which case it wouldn't have mattered if it took 3-4 months...as it is now we have 8 weeks until our facilities are reduced, then a further 4 months for it all to be paid back....
The short term loan idea would work, but there's just not enough lending value left int he property, there's enough real equity, but the amounts which a bank consider equity and what they actually are are different in a falling market.
It's all terribly frustrating and actually quite worrying.
Could you get an investor/new partner.
Although not Ideal, if the banks are not an option at the moment it may be a route that could be worth exploring.0 -
Approaching other banks leaves us with the same problem organising more secured lending, the time it would take to change over, get the security off the existing property, swap the security to the new bank, provide all the relevant financials they require (our year ends 31st Jan and they need this years account).
The calling in of the facilities has truncated any time we had available. We feel a bit frustrated as in hindsight, we should have bimbled along and asked other banks and swapped over, in which case it wouldn't have mattered if it took 3-4 months...as it is now we have 8 weeks until our facilities are reduced, then a further 4 months for it all to be paid back....
The short term loan idea would work, but there's just not enough lending value left int he property, there's enough real equity, but the amounts which a bank consider equity and what they actually are are different in a falling market.
It's all terribly frustrating and actually quite worrying.
I really feel for you. Advice for another time is to borrow from more than one bank.
To return to the here and now could you get help from elsewhere? Sell some equity in the company for example or borrow on terms that allow the lender to take equity if things go well for the company but remain as a normal lender if they don't.0 -
Could you get an investor/new partner.
Although not Ideal, if the banks are not an option at the moment it may be a route that could be worth exploring.
This is actually my preferred route, I really don't want more borrowing. However as this has been dropped on us rather unexpectedly, we're a little unprepared to be wooing potential investors.
Getting decent business plans and cashflow forecasts together takes a bit of work, but I've made a start.0 -
Sorry to hear about your problem.
As has been said before shopping around is a good place to start. Use contacts - if you know anyone who's very happy with their bank find out who and reach out.
Make sure that you have a good cashflow forecast with sensitivity analysis when you meet as it will make you look on top of the situation and more credible which is more likely to result in a positive result.
If necessary I'd even seek financial advice in preparing a forecast.
Good luck.0 -
Just a quick thought. If y/e is 31/1 then isn't your last y/e 31/1/08?0
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