The credit crunch lands at my door.

Alan_M_2

silvercar wrote: »

Do people really order 3 months in advance or do you forecast stock levels?

Another thought. Do you own the warehouse? Is there a possibility of sale and lease back?



With the whole family involved, can no-one offer property as security for the loan? How new is this business? Would it be possible for you all to draw down less from the business in order to leave some money in it to pay for stock?

Sure, I have one customer fitting 600 kitchens over the next 18 months, that's 10 containers of granite, we buy in as the units are rolling out.....3-4 months in advance.

But we have to predict our own stock levels three months ahead....we need a best guestimate as to what stock we'll need in three months time.

Our current lending is secured on family property, the reason for the facilites being reduced then called in is the banks discomfort with falling property prices and their future ability to realise their money if the worst case scenario occurs. As they can see we are currently liquid they decided now was a good time to cash in and call it quits....doesn't help us though.

silvercar

Our current lending is secured on family property, the reason for the facilites being reduced then called in is the banks discomfort with falling property prices and their future ability to realise their money if the worst case scenario occurs. As they can see we are currently liquid they decided now was a good time to cash in and call it quits....doesn't help us though.

Pretty narrow minded of the bank. If they are only offering funds secured against property then they are not giving you any facility based on the value of the business. (Isn't it the LloydsTSB advert in the papers that promises they won't do this?)

Would they accept personal guarantees from any of you, without security?

Isn't the government meant to be stepping in and offering guarantees on these sorts of business loans.

I think you need a local expert who would know where to find funds. Chamber of commerce ? Do you have a good accountant?

Alan_M_2

silvercar wrote: »

Our current lending is secured on family property, the reason for the facilites being reduced then called in is the banks discomfort with falling property prices and their future ability to realise their money if the worst case scenario occurs. As they can see we are currently liquid they decided now was a good time to cash in and call it quits....doesn't help us though.

Pretty narrow minded of the bank. If they are only offering funds secured against property then they are not giving you any facility based on the value of the business. (Isn't it the LloydsTSB advert in the papers that promises they won't do this?)

Would they accept personal guarantees from any of you, without security?

Isn't the government meant to be stepping in and offering guarantees on these sorts of business loans.

I think you need a local expert who would know where to find funds. Chamber of commerce ? Do you have a good accountant?

Nope, no lending without security.

We do qualify for the governement backed scheme, it's actually replaced the SFLGS scheme. Takes roughly 6 months from application until draw down. (I've actually been through this process two years ago and it really does take 6 months which is absurd).

Current school of though is approaching competitor based at the other end of the country for a reciprocal arrangement. It makes sense.

RainMaker_2

AlanM

Can you entice your debtors to stump up sooner, maybe by offering then a discount ? That, and some negotiation with your trade creditors just might help you over the hump ?

Alan_M_2

RainMaker wrote: »

AlanM

Can you entice your debtors to stump up sooner, maybe by offering then a discount ? That, and some negotiation with your trade creditors just might help you over the hump ?

We don't offer credit, from our customers point of view we are a cash business, we need to finance our stock, we cant finance the purchase and the sales, it's one or the other.

Nomad25

Current school of though is approaching competitor based at the other end of the country for a reciprocal arrangement. It makes sense.

Try whatever you can and if it's out of your market area even better.

RainMaker_2

Alan_M wrote: »

Current school of though is approaching competitor based at the other end of the country for a reciprocal arrangement. It makes sense.

Why would a competitor be interested in financing your stock ?

tirano

Hi
Please do not take this the wrong way, but I can see it from the Banks view.

You have been with the Bank for around a year, you have no customers owing you money, therefore apart from personal guarantees the Bank has little other security.
Your customer base is in construction, they may well have orders but these orders could disappear overnight. This is a very high risk from the Banks view. The majority of threads here are about house sales stalling, construction drying up etc.
Surely the way forward for the time being is to cut back to one container at a time, how long does it take to arrive from India ?
Finally are you confident that your margins are sufficient, sounds fairly cut throat.

Alan_M_2

tirano wrote: »

Hi
Please do not take this the wrong way, but I can see it from the Banks view.

You have been with the Bank for around a year, you have no customers owing you money, therefore apart from personal guarantees the Bank has little other security.
Your customer base is in construction, they may well have orders but these orders could disappear overnight. This is a very high risk from the Banks view. The majority of threads here are about house sales stalling, construction drying up etc.
Surely the way forward for the time being is to cut back to one container at a time, how long does it take to arrive from India ?
Finally are you confident that your margins are sufficient, sounds fairly cut throat.

I actually also understand why they've done it. I just didn't liek the way it was done.....

Shipping time is 3 weeks, and a week handling and delivery.

Alan_M_2

RainMaker wrote: »

Why would a competitor be interested in financing your stock ?

He wouldn't, I'd enter into an arrangement to sell his stock (exclusively) therefore not having to finance our own. It's a lateral thought and worth a conversation.

They have a lot of customers in the South but are based in the north, it would effectively be an agent arrangement.