Overdraft - Please Help

Chapsy

Hi, I'm new here and in need of some advice.

Three years ago I started my first business as a sole trader. Unfortunately, Like a lot of businesses the last year has been a struggle and I have ended up £14800.00 overdrawn. I have an arranged, unsecured overdraft of £15,000.00 .

The problem I have is I'm unable to continue in business due to family issues, I have to leave the country until the end of the year to look after a relative.

I'm 24, live rent free with family, have no assets or other debt and I only have around £2500.00 in cash.

What I need to know is, Will the bank accept monthly payments of £250.00 per month if I leave enough in the account until I return?

Will I still be charged interest on these payments?

When i return I would be unable to go back into business but I do have a job lined up were I would earn approx £500.00 per week after tax.

Would the bank allow me to continue to pay a minimum of £250.00 per month until the overdraft was settled or would they pressure me for more?

Is this the best option for me or do I have others?

Would paying off my overdraft so slowly effect my credit rating (5 or 6 years if I could only manage £250.00 per month) ?

Stressing out about this debt as it's the last thing you go into business for, Any help would be greatly appreciated.

Thanks in advance!

Chapsy

Bump - Stressing out - Any advice would be amazing.

triple_choc_chip

Hi Chapsy, I'm not a bank or financial expert or anything, but have been self employed for 30 years.

You seem to be regarding your overdraft as having become a loan that needs to be paid off in installments so I'm not sure if you've already informed the bank about your trading status.

In my experience, everything is automated, and the bank is only alerted to overdrafts that go over their limit so as long as you stay under the £15000 no one should notice. (The exception to this would be if you have a designated small business manager making an annual appraisal who notices there is limited activity on the account.)

You will be paying interest on the overdraft - make sure you know if it is added monthly or quarterly so that the interest charged doesn't take you over the limit. You will know whether £250 a month is enough.

If you can pay into the account and gradually reduce the balance that is obviously good and if you ever get that small business manager phoning you, you will be able to demonstrate that you have a responsible attitude to paying it down and maybe persuade him not to cancel the facility. Obviously if the overdraft is cancelled it becomes a debt payable immediately.

If they knew you had ceased trading and left the country they would cancel the facility, I would think. So the most important thing is that you continue to service the account and keep it within limits.

Good luck