Business Loans & Personal Guarantees

OrsoGrande

Help - are the bank right? I increased an existing business loan by £100k and signed a personal guarantee for the increase. I have since paid down the business loan from £340k (£240k + £100K) to £285K but now the bank have asked for my business loan back and the £100k I personally guaranteed. Consequently my business is up for sale! I believed the personal guarantee would only be called in if the bank don't recover the o/s business loan - can they do this to me? It may mean declaring bankruptcy! Help!

jonesMUFCforever

Why are they calling in the loan and guarantee?

Is your business making money?

Have you approached new bankers?

Why sell a business if it is making money or is there information here that you have not posted?

antrobus

OrsoGrande wrote: »

... I believed the personal guarantee would only be called in if the bank don't recover the o/s business loan ...

That's what I believe as well.

Presumably however, the business has not repaid the £285k. I'm guessing that the loan was an overdraft repayable on demand? In which case the failure to repay on demand would trigger the guarantee.

Tixy

If this was a loan (not an overdraft) has it been recalled because you have broken covenants set out in the loan agreement?

OrsoGrande

Basically - following a dispute with HMRC a winding up order has been issued - the bank have therefore frozen the business account and demanded the business loan, the od and my pg! I have to sell or let administrators/receivers liquidate the company assets (more than the amount owed to the bank) As I've taken the bank's advice all the way along and used their "recommended" agent when dealing with HMRC I feel aggrieved - especially as the bank refuse to sanction the sale of a personal asset (over which they have a 2nd charge!) which could placate HMRC! In the words of a business acquaintance I "have been trussed up like a Christmas Turkey!" If I am forced to repay the PG then personal bankruptcy is on the cards!

redpete

I don't understand why you are treating the business loan and personal guarantee as separate things. From your explanation you had business loan of £340k of which you are personally responsible for up to £100k. If the business cannot pay back the whole amount then you are personally liable for up to £100k.

So you are probably correct that they can only call on your personal assets if the business assets do not cover the full amount of the loan. But presumably the business is not worth the full amount and therefore you are liable for the balance up to £100k?

Conrad

Yes the Banks can do all this no problem. I have a client right now to whom this is happening - she owns care homes. The annoying part is I could easily have re - mortgaged her away from her Bank last year, but as ever she knew best and decided to stick with them and now she's in a right pickle.

WARNING - to any business owners being approached by certain Greek Banks based in London. From what I can tell they are reeling unwarry people in and having all thier assets signed over as security and then a while later calling things in so the owner is forced to rapidly sell real state assets which the same Greek Banks then advise thier co - hort developers of who then swoop in and make low offers and the Banks more or less threaten the sale is made thier and then.

OrsoGrande

I'm grateful for the posts/replies so far as they confirm my initial thoughts - that the pg kicks in if the sale of the business assets does not cover the current bank liabilities. I never considered the pg to be seperate from the loan - I merely could not understand why it was called in at the same time as the loan and overdraft - I appreciate that I will be liable IF they (loan & od) are not repaid. Thanks for the help and advice eveyone - I'm grateful!

Orso Grande

jonesMUFCforever

Pity you didn't mention these facts in your original post!

OrsoGrande

Indeed - but I'm learning!