Rock and a hard place - Loan ideas/New Employment

Jalani1

Started a new contract job recently using an umbrella group (after 4 months out of paid work, during which I used savings to self-finance bills rather than claim benefit). Only after starting the new role was it disclosed that the employing agency policy is for invoices to be settled for either limited companies or umbrella groups some 6 weeks after submission, and the first invoice can only be submitted after 6 weeks in the role (please note: it was a 1 week turnaround time between working, invoice submission, and payment on my last contract) Unfortunately, this policy means I won't get paid until 12 weeks after starting my new job which would be after Xmas.

I am desperate to make a success of this new role so can't question company payment policy. I exhausted my savings in the 4 months I was not working and this means I have little choice but to try and finance my bills/living/travel expenses until Xmas (which would be about £3k).

I presently have £150k balance on a mortgage with equity of about £50k, I have £11k on an unsecured personal loan, and £4k on credit card. Ideally I want to consolidate the £15k loan/card with a personal loan of around £18k and leave around £3k left to cover me until I finally get paid. FYI my gross income under the new job will be around £48k.

While I have yet to make any applications getting finance is likely to be difficult because while my credit history is immaculate I cannot demonstrate any income in my new role, or for the 4 months before this, and my local council is yet to update its electoral roll since we moved in the summer. Meantime, as my mortgage was only taken out in early summer, I suspect it would be too soon to try and change amount of borrowing etc. I have also thought about the friends/family route but this isn't on, so any suggestions gratefully recieved.

dealer_wins

Any bank/loan company will want to see an absolute minimum of 6 months salary received before they will even consider an £18K loan im afraid.

happycamel_2

Tricky one. Is there anything you can sell eg liquidate car, replace with £500 banger, upgrade to newer car once you've saved up. Is the contract role full time, is there any scope for additional ad hoc work or a second job (eg out of hours Christmas shelf filling).

You could try invoice factoring but you'd lose some money (usually about 20%). This is where the 3rd party gives you 80% of the value of the invoice now and then the umbrella group pays the whole invoice value to the 3rd party.

Are you a sole trader or limited company. If the latter and you can get a business loan you could pay your salary from the business and then pay off the loan when the invoice is paid.

You could try explaining the circumstances (and providing the subco contract) and ask for a payment holiday on the mortgage but I agree it doesn't look likely.

Jalani1

Thanks for reply. No car to factor in I am afraid. My new job is a 1 year full time contract and there is scope to enhance the daily rate with greater output but again all work is effectively paid 8 - 12 weeks in arrears and this doesn't help in the meantime. I am using an umbrella group at the moment. On my last contract the umbrella group I used offered an advance service ahead of invoice settlement at a flat fee of £30 which was very reasonable. Unfortunately, on the new contract the agency only uses its preferred umbrella partner who offer no such service. Therefore an advance from the umbrella group or a business loan is out of the question.

All I know is that I can't allow this slow processing of invoices to negatively impact on my personal finances because this in turn could jeapordise my ability to get contract work going forward or personal credit. I am thinking about looking at a secured loan and seeing if this would be a possibility. Just find it quite shocking that a company would expect new employees to work for so long before getting paid, especially given that all businesses are meant to settle invoices within 30 days maximum...

laurel7172

Take in a lodger?

Are you maxed out on the credit card?

Are you working direct for the company, or is this an agency you haven't worked for before? When I did my ex-partner's books, the agency used to factor the invoices to give their contractors a quick turnaround...but times are harder now, I guess. If an agency, have you considered asking whether they could sub you the money you need to get to work after the first invoice goes in? If you can't do the job due to lack of petrol money/train fare, your replacement could be through another agency and your current agency would lose out.

Jalani1

Unfortunately, taking in a lodger is not an option as we only have a 2 bedroom property and our baby is not even a year old. My current role is with an agency who have placed me in a large firm. As I use an umbrella group they are technically my employer and an invoice is raised through them to the agency for payment. The agency obviously use the 6 week 'processing period' to secure monies from their client in turn to pay me via the umbrella group. Unfortunately, neither the agency or my umbrella group offer any advance facility on invoices and the 6 week processing time set out on the password protected part of their website is non-negotiable as is the fact I cannot invoice until 6 weeks into the job. However, this information was only available after the contract had been signed and after I had started work when I was given a log-in details. This seems a bit unfair as had I known I would need to work for around 12 weeks before getting paid I might have considered my options. Now I am on a contract it wouldn't help my reputation to cancel it notwithstanding the fact there are financial penalties for doing so, therefore this is not an option. Consequently, I need to find a way of funding my living expenses until my first payday but I seem hindered by fact I haven't had any pay for 4 months and by delays in the council updating electoral roll. Fact is if I wasn't working and claiming benefit at least I would have jobseekers coming in with mortgage interest likely payable too. Doesn't seem right that it would be easier for me to claim benefit rather than work at the moment does it...

happycamel_2

Could your partner end her maternity early and go back to work or could you or she take an evening job? Can she take a loan based on her income and earnings history. I guess you have child benefit, SMP and tax credits coming in already. Would her employer offer an advance of salary. Could either of you ask for help from your parents? Are there any smaller items you could eBay? Maybe you could use a mixture of the above sources?

As a mum myself I'm worried you've sailed so close to the wind, financially speaking, with such a young child. Why didn't you claim benefits when you were entitled to?

Tixy

You say the umbrella group is your employer - do you mean this literally? that you are employed by them under PAYE and have an employment contract? Or are you really self-employed?

Assuming you are an employee as you state - is this way of paying you detailed in your contract? and did you not have sight of this before you took the job offer?

If you do have a contract, detailing your salary and the timing of your pay then have you tried approaching your own bank with this paperwork to see if they will consider a small overdraft, as you don't mention having one currently.

somethingcorporate

you have the certainly of a 1 year contract only - no (sane) bank is going to touch you with an £18k loan so get this idea out of your head already.

You're going to need to go down the old F&F (friends and family) route I am afraid. There is no point trying to blame others (council etc) as you've taken some risks and I agree that you have sailed too close to the wind.