The credit crunch lands at my door.

mr.broderick

Alan_M wrote: »

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)

Hi alan, you have always been one of my favourite posters and it has upset me to read of your current problems. I have thought long and hard and the only advice i can muster is to apply to appear on dragons den. Good luck.

Alan_M_2

mr.broderick wrote: »

Hi alan, you have always been one of my favourite posters and it has upset me to read of your current problems. I have thought long and hard and the only advice i can muster is to apply to appear on dragons den. Good luck.

Do you know what...When I started this business some 4 years ago I applied for Dragons Den, filled all the forms in and sent it all off.....I heard nothing.

Then 18 months or so later I got a call accepting me on the show...at which point I'd just been through a very expensive financing operation and got what we needed to expand into larger premises....talk about bad timing!

mr.broderick

Alan_M wrote: »

Do you know what...When I started this business some 4 years ago I applied for Dragons Den, filled all the forms in and sent it all off.....I heard nothing.

Then 18 months or so later I got a call accepting me on the show...at which point I'd just been through a very expensive financing operation and got what we needed to expand into larger premises....talk about bad timing!

I'll tell you what alan not everyone on here likes me but talk about insider knowledge

tirano

Enterprise Finance Guarantee ?
Says its available now

http://www.berr.gov.uk/whatwedo/enterprise/enterprisesmes/info-business-owners/access-to-finance/sflg/page37607.html

tirano

EFG is available to viable businesses that in normal circumstances would be able to secure lending from banks but who cannot secure bank lending in the current times

Alan_M_2

tirano wrote: »

EFG is available to viable businesses that in normal circumstances would be able to secure lending from banks but who cannot secure bank lending in the current times

Correct, this replaces the SFLGS that has been in operation for a fair few years.

My year end is actually the end of this week. To apply for the EFG I'll require my current years accounts as provided by my chartered account, I should have this by the end of February.

I require cash flow forecasts and projections for the next 12 months specficially and long term forecasts for 3 years, these I can easily complete before the accounts are ready. So i;m investment ready (or at least presentation ready by the end of February).

My bank will give me a decision within a week of receiving this information and my presentation. Then...and this is the killer, it goes through the government red tape, that is time scale unknown (my last experience of this when I successfully obtained an SFLGS loan was 14 months start to finish, 8 months preperation and courting and 6 months from time of acceptance to drawdown.

My bank informed me on Saturday my facilites will be removed, I need to order (and finance goods) by next week.

I do not have the time to apply for this, even my bank confirmed the same.

I cannot risk procuring short term high tariff lending on the basis I MAY be accepted for an EFG.

The EFG's are designed for larger operations than me. The definition of small business is one that employs under 250 employees. They are designed to securitise the existing borrowing in a way that allow leverage on a low security level - you are still required to secure 25% of the lending and you pay an insurance premium to the government on top of the bank interest rate (which I have yet to be advised).

The fact my bank decided to withdraw precludes me from taking this route, I do not have the time. Sadly, as it looks wholly viable.

PasturesNew

I've no sensible, meaningful or constructive input to give, but my thoughts are with you.

I could list ways to raise the money, but they'd be ideas that wouldn't fit your business model, your client base or your needs. So I won't patronise you with my whimsical thoughts.

Good luck, I hope this thread ends in success for you.

xx

dopester

mr.broderick wrote: »

Hi alan, you have always been one of my favourite posters and it has upset me to read of your current problems. I have thought long and hard and the only advice i can muster is to apply to appear on dragons den. Good luck.

It doesn't solve the immediate financing issues, but with all his xx-years wholesale-trade.. background experience in to everything from the quarrying to the shipping... I'd just think that could be a significant advantage beyond wholesale trade side.... perhaps setting up a design arm targeting the top of the market - with salespeople on commission. Perhaps that steps on toes of existing clients though.

And that might go well beyond your experience stone tiles and granite counter tops... and I've no idea how much investment it would require to set up.. and you'd be competing against established firms anyway... but I've always championed targeting top of the market to seek big commissions on sales but with lower turnover, to try and lower dependence on financing, rather than larger turnover with thinner margins on budget stuff.

Kitchen & Bath (USA)

Looking Ahead

Forecast 2009

By John Filippelli

January 2009

Surprisingly, there are some that claim that they have never been busier, like Sandra Steiner-Houck, CKD, and president of the design division for Columbia, PA-based Steiner & Houck. “We market to the very high end; our average kitchens are $250,000 to $350,000. That has shielded us,” she reports. Krengel concludes: “Overall, it’s all about survival, bootstrapping and getting back to the roots that made you successful as a business, whether you’re a big, medium-sized or small design firm.”

Fabricators, too, are facing unprecedented challenges due to the poor economy, a continuing home construction and home sales crisis and overall lack of consumer confidence, according to Gary Distelhorst, executive v.p. and CEO for Cleveland, OH-based Marble Institute of America (MIA). He notes that “a researcher in the field has reported that overall demand for dimension stone is off 8% from 2007, while granite countertop demand was off just over 9% and granite and marble tile off by 8%.” But the soft economy – if navigated properly – could not only be a chance to survive, but thrive, says Russ Lee, executive director for Henderson, NV-based International Solid Surface Fabricators Association (ISSFA)

Article link.

Sorry if my thought about a design-arm seems uncaring.. I'm just pushing for ways you might be able to come up with tweaks to increase profits at limited risk.

Alan_M wrote: »

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.

What is your position on settling on, or making an offer to settle, the secured lending you've already got I wonder? If you can do so and stay head above water I'm thinking that may be better than going all in to try and get the extra £65K secured to keep trading - unless you are confident that is the way forward and you won't hit further issues down the line.. with even more debt secured to deal with.

If you could sort of come out of it without being wiped out and setup fresh again is what I'm thinking - as many companies seem to do - but then of course you'd need financing again.... but maybe a different lighter strategy to go with it (?).

Sorry for waffling or coming across as uncaring or floating whacky ideas. There was also that panic reported US side on granite countertops.. not heard any concerns here about it Europe side though.. and hope it just goes away.. but you probably know about it.. just something to keep in mind I suppose.

Alan_M_2

dopester wrote: »

If you could sort of come out of it without being wiped out and setup fresh again is what I'm thinking - as many companies seem to do - but then of course you'd need financing again.... but maybe a different lighter strategy to go with it (?).

This is actually what we're doing, I'm currently talking to some of my larger customers to take stock in quantity at a discount, this will allow us to pay down our position and close in a controlled manner. At least it's one option whilst I search for possible investors.

Edale

A bit of a long shot but have you thought about approaching the landlord of your premises (assumimg it is leasehold). Those units are often owned by very wealthy individuals and he/she would obviously have a vested interest in supporting you.

I know words won't solve your problem but it is testament to your input on the forums that people are posting such good things about you, I really hope this stupid situation can be sorted, I just worry how many small businesses are suffering the same at the moment, my bank cut my overdraft limit from £5k to £1k yesterday, I haven't used it for years and my creditworthiness has improved loads so it just shows you they are desperate to reduce their exposure.