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Impossible overdraft

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Comments

  • robatwork
    robatwork Posts: 7,301 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Are you saying your business bank account is permanently in the red?

    Are you actually solvent?
  • AWCONSMAN
    AWCONSMAN Posts: 10 Forumite
    Third Anniversary First Post
    eskbanker wrote: »
    I may be wide of the mark here but it comes across as if you're hoping that someone's going to say "poor you, yes, you've been shafted by the nasty bank and here's how you can reclaim" but that's not going to happen.



    You mention the overdraft originally being needed "to cover wage bills etc" which clearly suggests that this isn't just a self-employed sole trader type of business, is the business actually viable if it's only just covering the servicing of a long-term overdraft? How are you making a living from it?

    What do the bank's business managers suggest once it's clear that they're not in a position to provide a loan?

    I'm Certainly not looking for anyone sympathy, I've always done things the hard way, should have listened more at school but if I'd known then what I know now ...........
    I was a self employed builder who was handed on a plate all the work of a small company who retired. So I expanded 10 fold over night. But with no backup or any idea about the implications with regards tax or vat. My then accountants, ( they were book keepers at best )increased what they charged me for a short period before they took a step to far with another of their clients and ended up " doing a stretch" . So I moved to another accountants who has eventually managed ( after 15 years) to get me somewhere near straight.
    In the mean time my bank manager at the time said that as I was going overdrawn to pay wages for 8 guys every month I should have an overdraft. So he set it up, there and then 10k.
    After about a year the bank decided he wasn't very good and he was moved on.
    Since then every time I get a new manager I'm invited in for a chat, the conversation eventually gets around to what they call this ongoing OD and that they would like to see it sorted. So my usual reply is " well if you can sort it your better than the rest" . A week later I get the call that I can't afford it so I just keep paying out the interest and charges and as long as I do their happy because that's a tidy little income for them and even if I were to go bust now their quids in because they've already had their money back 3 fold.
    I've been back to just myself for 10 years now and have paid back all my tax debts (30k) and vat debts (27k) plus all credit cards etc, 3 of 6 kids have been through uni and are doing really well as are all other 3 so plenty to be really proud of but just would like to get rid of this hanging over my head week in week out.
    As I've shown, I'm happy to get it switched to a loan to repay it, rather than run away or as you suggest get some form of combo for it. But I would just appreciate a little more help from a bank that I've been with for 25 years.
  • xylophone
    xylophone Posts: 45,745 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I'd forget feeling hard done by and waiting for your current bank to offer a solution.

    Are you able to get a loan elsewhere?

    Are the six children able to club together to lend you £10,000 - you can then repay them (with interest) as soon as possible?
  • Flobberchops
    Flobberchops Posts: 1,279 Forumite
    1,000 Posts Fifth Anniversary Combo Breaker
    It does seem odd (but by no means unbelievable) that your bank's affordability calculations were content to offer you the overdraft, which you demonstrated you could make repayments on, but found you were ineligible for a loan that would have been easier for you to make repayments on. Even if the calculations were correct - and bear in mind a bank's risk appetite changes from year to year, and even month-to month - there's certainly a lack of common sense being applied. It's usually possible to contest a declined loan decision by providing supplementary evidence, was this ever mentioned or offered?

    It also strikes me as odd that your bank, as a responsible lender, never offered to put you on some kind of recovery and collections scheme where they worked with you to pay off the outstanding capital, not just interest and fees. Possibly this would have involved freezing the account or making some other kind of concession, but a bank will generally prefer to see their loan repaid than fleece you for fees for perpetuity. Unaffordable loans tend to get defaulted on, which isn't profitable.

    And lastly, if this was a genuine and pressing financial concern for you, why couldn't you raise the funds yourself? Take some overtime, sell your vinyl collection, beg and borrow from friends and family, release equity from your house, that kind of thing? I don't want to seem unsympathetic but it sounds like you stuck your head in the sand for a long time.

    Anyway, it's not too late to seek more (and better) advice from your bank. Although debt charities exist for individuals I've never really stopped to think if the same exists for companies - I suppose the most common thing is to declare insolvency. Have you thought about liquidating part of the business, or taking on an additional partner who will buy out your debt? Best of luck.
    : )
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    AWCONSMAN wrote: »
    But to have paid back over £30k for £10!k is reasonable ?

    £2k a year? Very reasonable.
  • eskbanker
    eskbanker Posts: 38,022 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    AWCONSMAN wrote: »
    I've been back to just myself for 10 years now and have paid back all my tax debts (30k) and vat debts (27k) plus all credit cards etc, 3 of 6 kids have been through uni and are doing really well as are all other 3 so plenty to be really proud of but just would like to get rid of this hanging over my head week in week out.
    If you've repaid something like £60K of other debts over the last ten years (i.e. £6K/year on average) and also now have fewer outgoings with kids leaving uni/home, shouldn't this mean that you'd now have at least £6K/year more available money to throw at the last of the debts?

    Perhaps contrary to appearances I do have some sympathy but in my humble opinion it's futile to focus your energy on the unhelpfulness of your bank so I agree that you'd be better looking at other avenues, such as finding other sources of funding as per other posters' suggestions above....
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