SFLG Loans

skoalbandit

Hello, I have just copied a thread i started on another site where I havent been able to get any specific advice, if someone can please have a read and maybe give some advise it would be great, this seems like a more appropriate place to ask financial questions.

In 2007 I took out a business loan from a bank, without security I was able to borrow the amount I needed by signing up to a SFLG loan.
I started my business just when the recession hit, carried on and worked hard until September 2009 when a large customer pulled out, unfortunately I had to cease trading.

At the end I made an appointment with my business banking manager, a very nice lady who talked me through what would happen and how to notify the bank officially, I did this and thats when the problems all started.

To start with I noticed the banks account which was out of my control ( I still recieved some statements) was still open and the loan was being repayed with the money I had left in the account, after 2 months I noticed the business account was overdrawn but the loan continued to put the overdraft higher to nearly £1000, I never agreed an overdraft so penalty charges were being put on top.
I heard nothing from the bank until about a year later when I recieved a letter asking to pay the outstanding balance, the amount requested was wrong and included charges to the overdraft.
Being a SFLG loan, I had to pay a premium to the government every quarter, basically the government acts like a guarantour and will pay the bank back 75% of the outstanding balance, I replied to this with a letter telling the bank the amount they are asking me for is wrong and how on the day I gave notice that even if the government was to pay the 75%, the total includes charges to the overdraft which didnt add up to my calculations.
A year on I recieved another letter basically telling my I owe the money and it was still the wrong amount, I wrote back same as before.

Yesterday I recieved a letter from a debt collection agency asking for the wrong amount, the bank has instructed them wrong with the amount I actually owe.

I picked up my mail 2 hours after the Saturday closing hours so I intend to call the collection agency in the morning.

Is there any advice someone might be able to give me please, with the wrong amount being requested surely the letter I have been sent has no standing, I have all paperwork and all correspondance regarding the loan and discrepency in the total owed.

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Just to add, After I noticed the money being taken from the account to pay the loan I emailed the banking manager and was told it was all part of the process!?.

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Today I explained what had happened to the agency, how interest had accrued which was out of my control and the fact that I believe I am only liable for 25% of the balance, I was asked all sorts of questions about my work status and what I believe the actual amount I owe is, reading online last night about dealing with debt agencies I didnt supply much information to them or confirm any specific amounts as I am no longer sure of the correct amount due to the banking errors, only telling them I believe I owe 25% of the correct amount and to contact the bank to see if they could rectify the mistakes I believe they have made.

I contacted the assistant of the lady who I spoke with regarding surendering my account and letter of non payment of the loan, unfortunately this lady is on annual leave and cannot be contacted.
I explained the situation and after alot of checking of statements and going through everything even he seemed unsure of why I am being asked for such an amount and the SFLG not being applied.

I was contacted shortly by a member of the bank, I explained about the SFLG and he tried to tell me there was no such thing, I had to explain about the quartely repayments to the goverment in which he was unsure of and I had to give him information of a direct debit schedule I have.
The Bank advisor told me basically the SFLG I had didnt cover the 75%/25% and I wasnt guarantoured by the bank for any debts
The advisor has called off the debt collection agency for a couple of weks from today and he said he will find the original loan agreement, I have ths and it states

The Secretary of state for trade and industry has agreed under section 8 of the industrial development act to guarantee your payment obligations under this agreement on the terms and conditins agreeed between the bank and the secretary of state and subject to you paying the DTI premium referred to inthe specific terms and conditions.

When I first enquired about the loan, the manager told me about the guarantee and how if I defaulted I would only be liable for 25% of the borrowings, The advisor on the phone says this isnt true. The only way the bank would lend me the money was to go through this DTI agreement to minimise their loss if anything should go wrong.

I agreed on the loan face to face with the Bank manager and he sent the papers out for me to sign, How can what I was sold by the Business manager that day and what I actually signed up for be two different things?

Also to add, When I handed in the letter of unable to pay to the Banking lady, she told me not to worry, go home and forget about this problem as such a small amount and all the interest you have paid over the term the bank would see it as such a monor things and wipe it off, at no point did she mention about oweing all the money and not just 25%.

I feel I have been mis sold a loan and not really had everything explained properly, if the goverment wont or would never pay their share of the debt, told very little or very inacurate information regarding all of this and to top it off they are making charges againstme to an account I had no control of after informing them I was going to cease trading.

Thankyou if you got this far:beer:.

Tixy

I certainly have seen SFLG scheme loans where the borrower was only required to pay back the low % of the loan - but not in enough detail to know how easy it was for them to get the bank to agree to this.

What letters have you actually sent to the bank so far regarding this.

I see you mention 1 where you informed them it was the wrong amount (when they wrote to you around a year later). Have you sent any letters since then?

I wouldn't leave things with the bank investigating over the next 2 weeks. I would follow up your call to the bank with a formal letter of complaint - headed up as such - and stating you want this matter investigated properly as a priority.

I wouldn't speak to the bank on the phone again - no point as a lot of the staff won't know enough about SFLG loans (or have even have heard of them).

Certainly don't telephone the debt collectors at all. If you want to respond at all send them a copy of your complaint to the bank.

skoalbandit

Hello Tixy.

Thankyou for your reply, I am nearly there on a lenghty letter to be sent to the bank.

I will post again when I recieve a reply.

antrobus

I suspect there is a basic misunderstanding here. It's the bank's loss that HMG has guaranteed, not the borrowers.

Or as the SFLG booklet put it;

It is important to remember that you are liable to pay the full outstanding loan amount back to the lender – not just the 25 per cent we do not guarantee.