Need some quick advice

Notmyname_3

OK this is a slightly complicated story.

A company in which I'm a major shareholder is in the process of getting sold, my proceeds from the sale will be substantial in the mid six figures (and no tax implications as I've held the shares over 5 years).

Unfortunately (for reasons I won't bore people with here) the sale was delayed from the back end of last year and is now expected to complete no later then the end of March.

However I had relied on the sale happening last year and as a result have got myself in a bit of a hole financially, my bankers while they've been supportive to date now need to see me payoff a slug of my O/D to restore confidence.

Therefore I have decided to do a loan consolidation. I have about 200k of equity in my property and total liabilities of about 55k. So I'm still ahead of the game.

My credit history has been good but as the sale didn't complete last year I've suddenly found myself in a horrendous squeeze (in hindsight I should have planned for the delay but didn't and now find myself squeezed).

Given that I missed payments at the end of January I suspect that'll have hit my credit score in the short term, however I'm tempted to do a 100k finance against my property (this will allow me to clear ALL my other liabilities and have a cash float till the company sale completes, in case of a further delay!!).

I have other assets of about 120K but I can't liquidate these quickly without taking a big hit on their value (probably liquidate at 50% of value).

Given my bank want to see something happening by the end of the month what would people suggest, my intention with a consolidated loan would be to pay it off as soon as the sale completes (I don't really like debt to be honest).

Thanks in advance for the help and congrats on a informative and well laid out site.

NMN

jonesMUFCforever

A company in which I'm a major shareholder is in the process of getting sold, my proceeds from the sale will be substantial in the mid six figures (and no tax implications as I've held the shares over 5 years).

>>>>Why should this be? No tax implications??

Given my bank want to see something happening by the end of the month what would people suggest, my intention with a consolidated loan would be to pay it off as soon as the sale completes (I don't really like debt to be honest).

>>>>>>>>>> Given that the sale has already been delayed how will you continue to finance repayments until such time as the sale has gone through.

It also occurrs to me that if your business and private bank accounts are held at the same place that they would be up to date with progress of sale etc.

I think there's a lot here you have not told us and your hope of getting a secured loan by end of month are slim.
What will you do after sale?
Do you not have an accountant??

Notmyname_3

CGT will only be 10% (shares held for 5 years) and I have some offset's so no tax.

It is a private business (it has well known VC investors who are driving the sale) but the accounts are held seperately (although I'm a major shareholder I'm not a director - I could choose to be if I wanted).

That's why I was going to 'over finance' using the float to fund repayments until the sale completes.

What I intend to do when the sale completes is take an extended break and then probably start a new business later in the year.

There's nothing I'm specifically not telling....ask anything and I'll let you know.

No I don't have an accountant.....my affairs are pretty simple to be honest.

NMN

jonesMUFCforever

Have the company not declared a dividend?
Could the company lend you the money?

You say that you are selling for mid 6 figure sum = 500,000? half a milion and you don't have an accountant and you say that your affairs are pretty simple!

Notmyname_3

No the company have not declared a dividend, I'm sure you're aware that any private company where VC's are involved seldom declare a dividend as it reduces profitability and cash on hand prior to a sale (and usually sale value is a multiple of profit and cash on hand). Also it would be highly inappropriate for the company to make a loan to a major shareholder during a sale process (even if these things are done totally above board they are NEVER perceived that way).

Your in the right ballpark but why would receiving that sum make life complicated.

My tax affairs were originally set up by my Lawyers so I have no concerns there, with regards to an accountant you make the statement as if it's dumb not to have one, why would I need one? My tax affairs are dealt with and I intend to use the funds cautiously after I've received them (as I said above I don't like debt!).

Anyway I think we're getting away from the original question which was is a consolidated loan a sensible way to raise funds quickly or are there other options open to me?

NMN

jonesMUFCforever

Then yhe answer is no as a secured loan will take time to arrange.
A consolidated loan will only be given if you can prove that you have funds to make repayment.
No salary no money no repayments?
Why has sale been put back?
Is it a problem with the books of your company or are the other side finding difficulty to raise the cash?
Either way you lose.

Notmyname_3

The sale was put back because a second bidder appeared and upped the offer then a third appeared and the three of them have now been given till the end of this month to finalise their offers then the preferred two offers till the end of March to complete (this should work out to my benefit in the longer term as it means I'll get more, but its a PITA at the moment).

Unfortunately because two of the bidders are listed I can't go shouting about this (insider trading laws apply).

From what I'd read here consolidated lenders are generally happy to lend against a property, is that not the case?

TIA

NMN

jonesMUFCforever

Yes of course but you will not get the money until their charge has been registered at Land Registry.
This is after they do searches to see who has prior mortgages, advise prior mortgages that they intend to get a second charge, arrange a valuation of your property, check that you have adequate insurance, send charge forms to your solicitors for signature, underwriters at mortgage company to check documents when they are received back and you think you can get the money by the end of the month!

Notmyname_3

So basically I'm scr*wed!!

Ho hum.

Thanks for the advice....as I said earlier in hindsight I should have planned for this.

Thanks anyway.

NMN