Business Loan

sunshine_07

A couple of years ago (at age 25) I went to the bank to ask for a loan to start a second business. I started my first business (sole trader) with my own funds which had been running for about 2 years so they agreed to give me a loan based on my first business (but the real purpose was to put it to startup costs).
I needed £20,000. I already had an overdraft of £5000, so they said that I should lump it together and get a loan for £25,000. They also said that a condition of the loan was to include payment protection(which totals to £8590 over the term).
They also gave me the loan based on the fact that I was an individual - sole trader - and not a business. This would mean that our house could be at risk.

Now here is the bit that I stupidly overlooked. They gave me the loan over a 10 year period. The payments are over £500 a month. This means that I will end up paying back more than £63,960. I feel that I have been completely mis-sold this loan and only now am I realising just how much the bank will take from me.

For the last 16 months my earnings have greatly decreased due to illness (back injury which I am currently under a specialist and expecting surgery). This has meant that I have not managed to get the second business off the ground (although the money went to stock etc) and so things are looking bad. I have just applied to try and claim the loan payment protection (I have been scraping by up to now) however they have said that I am only covered for 9 months. I am now unable to pay the loan and last month they took the payment and I have not even been able to buy food for my 2 children. My husband is unable to help - we have a large mortgage and all his earnings go towards bills.

The bank loan was issued to me even though my bank manager was aware that we took an IVA out 4 years ago as we got into trouble.
I need to know now whether there is any way I can get help on this - ideally I want to shorten the payment period greatly and get more help long term with the payments until I am able to work full time again.
Or, alternatively would a second IVA be an option?

If anyone can offer any advice or point me in the right direction I would appreciate it.

Cheers,

Diane

Further Info:
After checking the paperwork it appears that the bank even charged me £500 to arrange this loan which was added onto the total.
With regard to the payment protection, I am being charged £8590 for the term.

jonesMUFCforever

It is normal for a bank to charge an arrangement fee for a Business loan.

The payment protection is there for you to claim - I don't understand why you have not persued this - yes it covers you for 9 months but this is from date of accident or incapacity not from today so they possibly will stump up £4500 in total towards your repayment.(Unless of course you had a pre-condition before the policy was taken out!).

You do seem to want to blame the bank and the business manager for lending to you - why is this - who made the first approach - did he/she phone you up out of the blue and ask whether you wanted a loan.
You have to take responsibility for your own actions.

Would it not be possible for someone else to come in with you with your new business to shift the stock to raise some money?

As for misselling you the loan - come on - you knew exactly what you signed up for - you had been in business before - it won't wash is there something else that you can accuse the bank of now?