Bank can't find paperwork for business loan : thinking through the implications

Humdinger1

Hello again everyone - can I please ask for advice. So, as previously described, in 2013 my business bank converted a 12k overdraft into a 24k loan. Following a lot of reading I'd done on this wonderful site, I asked recently for an exact breakdown of how the interest was calculated, because it didn't sit right with their explanation. How it should have looked overall is that (taking the months of the year with 31 days in as a reference point and bearing in mind that the loan has a fixed, not variable, interest rate; plus some capital was being knocked off every month) the interest should have gone down each month - but it didn't; it varied with higher interest being added to the loan in later months when more capital had been paid off.

So, a couple of weeks ago I called and explained this and asked for a breakdown of their calculations, which I never received. A few days later, chased it up again - the guy I spoke to that time said that the interest was worked out at the beginning and no matter how quickly I paid, the 15k interest on a 24k loan would always have to be paid off. I pointed out that that couldn't be the case as I was allowed to make over-payments without any penalty and if it worked as he was describing, they were in fact imposing a penalty. He said he would get the ts and cs emailed to me immediately and hung up. I followed up again a few hours later, to be told that the whole loan paperwork inc ts and cs would be emailed over. One week later I called again to be told that they cannot find the loan paperwork. Oddly, neither can I and usually keep all important paperwork together in one file; this makes me question whether any paperwork was ever actually issued.

Looking at some comments on the payday loan forum, I appreciate that some readers will feel that no matter how high the interest rate imposed, I should pay at the same level; they are of course entitled to their opinions. However, as the rate (10.99%) set is 4396% higher than the Bank of England base rate of 0.25% has been throughout the whole time the loan has been running, I see an opportunity to pay the loan off more quickly here. So far, I've paid
£12, 363.80 off a loan of 24k but still have 18k+ outstanding

My questions are:

1. Can a business loan without paperwork be enforced? I know it can't with consumer loans.The bank does have a directors' guarantee from me for up to 24k going back to 2009, if that's relevant. However, although I've moved house several times in that time. nothing has ever come up registered with the land registry for instance.

2. If the bank says that the fact I've been paying monthly for the last 3 years constitutes acceptance of the loan and its terms, is that the case? There have been a few phone conversations only in the last few weeks where the loan rate has been confirmed and that might well have been recorded.

3. If the negotiation ends up being about the interest rate rather than the amount, is there anywhere I can see what rates would historically have been offered by different banks? Or should I suggest that the interest should be recalculated (from the very start of the loan) at a typical consumer rate; or at a different rate altogether?

4. Is the bank likely to suggest that the original 12k overdraft and the additional 12k loan are treated differently? What would my best stance be on this?

5. if I succeed in any of this, is the bank entitled to say that any money we agree is outstanding has to be repaid immediately and then kick me out? I guess if so, it might make it difficult to find another bank that wants to take me on though certainly don't want any more loans or overdrafts.

6. How do credit ratings for companies work? Can the bank note a default or partially satisfied/settled debt against the company in the same way it could against a consumer?

I don't actually want to default at all and would like to keep a reasonable relationship with the bank - but would really appreciate informed advice on these questions. so that I can define my negotiating position.

Thanks again everyone
Humdinger

meer53

Why are you talking about defaulting ? What do you mean by your "negotiating position ?" Your paperwork would have shown the loan amount and the interest which has to be repaid, keep pushing for a copy of this to be supplied. It won't change the fact that you agreed to the loan, the interest rate at the time and also the repayment schedule, if you feel you can repay it by taking out another loan, then ask for a settlement figure and repay it.

DCFC79

Humdinger1 wrote: »

6. How do credit ratings for companies work? Can the bank note a default or partially satisfied/settled debt against the company in the same way it could against a consumer?

Well luckily no 1 except you can see the credit score so in essence the scores are useless.

jonesMUFCforever

Humdinger.
Can I ask one question? Where is YOUR copy of the loan agreement - please don't tell me you didn't get one because I don't believe you.

Is the loan secured at all?
If so default if you want but the bank will get their money back one way or another.
Even if they can't find the agreement they should be able to give all statements on the loan which will show the original transactions such as the capital lent plus any fees plus any interest if indeed it has been added at the beginning.
Take it from there.

baldelectrician

Send in a SUBJECT ACCESS REQUEST asking for ALL details


Remember to specify all paperwork, loan terms, call recordings and notes of your account on their system.

robber2

I think you are completely wasting your time and risking yours and your companies credit record and possibly your home; continue to pay off the loan and get on with your life.

Good luck

Thrugelmir

Humdinger1 wrote: »

it varied with higher interest being added to the loan in later months when more capital had been paid off.

It would vary. Some months have 28 days, others 30 and 31. Once in a while 29 days pops up to. The interest being calculated daily and charged monthly. Over the longer term it is still reducing though.

The amount you pay is fixed and is calculated to repay the loan over the term. Making due allowance for the variable number of days.

SeanG79

OK, so firstly a Commercial loan is not a regulated finance product, so:
1. The bank don't have to allow a reduction in interest for settling early
2. A subject Access Request regards Personal Information, not business

In response to your other queries, yes the bank can enforce the loan, they have your personal guarantee as security to fall back on, to ensure they get their money.

That you have been paying the finance and they have a personal guarantee, on the balance of probabilities, you had the loan and they can enforce it.

There will be no negotiation when they have the guarantee in place, they will enforce that before negotiating anything.

Forget about the business credit rating, when the company defaults on the agreement and they enforce the guarantee, it becomes a personal debt and they will report the default against your personal credit searches.

Basically they called in their overdraft but you could not settle it. They therefore offered you the loan which you accepted, they were smart and took a personal guarantee as security, in an attempt to ensure you repaid the loan...

robber2

sourcrates wrote: »

Hi,

You state the loan was for 24k, any bank loan under £25,000 will be CCA regulated as that is the threshold for unsecured borrowing.

t.

Its a business loan so CCA is not relevant

meer53

Barbara_Lowing wrote: »

Banks are not allowed to request a credit score? I am confused.

Banks don't use credit scores, why are you confused ?

Clive_Woody

Barbara_Lowing wrote: »

Banks are not allowed to request a credit score? I am confused.

Banks use their own method of scoring your credit worthiness, they do not use the experian number that is sold to you, you are the only person who sees that number which means it's a fairly pointless thing to get concerned about.