Business Acc overdraft.

I set up a business overdraft 18 years ago for £10k.   I had 8 people working for me back then and it was to ensure cash flow was good.  I set it up on the advice of my in branch business manager. 
Things didn’t work out when I got caught out by a VAT error.  I restructured and went back on my own in order to not have more complications with VAT.   I paid off all of my VAT and tax debts and business has been going well but I still have this overdraft hanging around my neck and draining my account every month.  It’s been if no real use , just runs constantly at £10k.  But with interest and charges I can’t make any headway.   I’ve asked 4or5 times now to change it to a business loan but although relationship managers say that it is the best thing , I get refused every time saying I can’t afford a loan. 
I’ve worked out that I have paid back approx £36k in interest and charges keeping this overdraft which I don’t want.  
I’m not looking for any sort of free ride , but are the bank acting in my best interests and trying to help me to pay off this debt.  

Replies

  • zx81zx81 Forumite
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    It would seem so.

    If you haven't managed to lower the OD at all, the bank seem right in saying you can't afford a loan, and are helping you avoid defaulting.
  • AWCONSMANAWCONSMAN Forumite
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    But the £36k I’ve paid in charges and interest could have gone to pay a business loan over 5 years and paid the £10k off for about £200 a month.  When at one point I was paying around £400 a month in charges 
  • [Deleted User][Deleted User] Forumite
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    AWCONSMAN said:
    But the £36k I’ve paid in charges and interest could have gone to pay a business loan over 5 years and paid the £10k off for about £200 a month.  When at one point I was paying around £400 a month in charges 
    That's all in the past and there is little to be gained from focussing on the charges and interest you've paid in years gone by. 
    Clearly a business loan is not affordable for you right now, so you need to start setting aside extra funds to pay off the overdraft. Once the Bank see you doing this consistently over several months you may be reconsidered for a business loan. 
  • dunstonhdunstonh Forumite
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    But with interest and charges I can’t make any headway.   I’ve asked 4or5 times now to change it to a business loan but although relationship managers say that it is the best thing , I get refused every time saying I can’t afford a loan.
    The Coronavirus may help you then.     Have you looked at the business bounce back loan?


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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