Business Loan - I feel violated!

[Ossiantoad]

Popped into to see a local company offering business loans, looking for a little working capital for a fifteen year old company. Chap was very friendly didn't seem to think it would be an issue, promised funds into my account within days. Said he would give us £20,000 and then if we made the payments for the first three months another £50,000 would be forthcoming.

Sent him some accounts, bank statements etc. He said a chap would come round to my house with the paper work to be signed. I asked about terms and he was vague, interest rate between 3 and 9% he said, promised to send me an email.

Email didn't turn up but the chap with the paper work did, wearing a suit and brown shoes.

Lots of small talk, lovely house, oh are these your children? how adorable!, what a splendid carpet, etc.

The brief case opened and there was just one set of papers in there.

The contract was headed 'Hire Agreement' - Unregulated.

The deal was as follows:

We sell our laptops and printers and furniture to these cowboys for £16,675 plus VAT.

We then hire the stuff back from them for £26,328.01 plus VAT over two years.

After two years we can carry on paying them £1,097.00 a month for the privilege of continuing to use our own chairs etc.

In addition the shareholders, directors and directors wives agree to give them first charge over everything we own.

And we need to pay them £1,600 upfront with no guarantee that they will even agree to go through with the deal.

And we need to lie and say that we've taken legal advice.

I asked the guy whether anyone ever signed this stuff without reading it. 'Sometimes', he replied.

[James_B]

I can see why you’d reject it, it I’m curious as to why you’d go to a company like this in the first place.

I borrowed, secured, from HSBC last year, £500k for £520 a month for ten years, with principal to be returned at the end. The big banks are competitive, pretty honest, and you know where you stand with them.

Do they just not lend on your sort of business, or have you issues in the past that lead them to pass on the deal?

I just can’t imagine popping in to a local shark to check out his rates.

[Ossiantoad]

James_B said:

I can see why you’d reject it, it I’m curious as to why you’d go to a company like this in the first place.

I borrowed, secured, from HSBC last year, £500k for £520 a month for ten years, with principal to be returned at the end. The big banks are competitive, pretty honest, and you know where you stand with them.

Do they just not lend on your sort of business, or have you issues in the past that lead them to pass on the deal?

I just can’t imagine popping in to a local shark to check out his rates.

The thing is James they look like a very legitimate business. Nice offices on a business park, very solid balance sheets according to Duedil. I went to see them personally. Lots of positive reviews on trustpilot and feefo (although now I look at them again the reviews do look a bit suspicious).

Working in a regulated environment myself it comes as a massive shock to see this stuff still going on.

As for why I chose them, well, I just can't talk to my bank. Ten years ago there was some frightful waste of space with no authority who was nominally our 'bank manager' or 'relationship manager', now there is nothing except a phone number that no one answers. Loads of companies send us emails telling us that they can arrange finance,one of them was local, I thought I'd drop in and see them.

Maybe I should go and see a bank that I don't currently bank with, perhaps as a potential new customer I might be allowed to speak to a mature human being.

[JQ]

Ossiantoad said:

Maybe I should go and see a bank that I don't currently bank with, perhaps as a potential new customer I might be allowed to speak to a mature human being.

Try Handelsbanken.

[MrJuice]

James_B said:

I can see why you’d reject it, it I’m curious as to why you’d go to a company like this in the first place.

I borrowed, secured, from HSBC last year, £500k for £520 a month for ten years, with principal to be returned at the end. The big banks are competitive, pretty honest, and you know where you stand with them.

Do they just not lend on your sort of business, or have you issues in the past that lead them to pass on the deal?

I just can’t imagine popping in to a local shark to check out his rates.

That's incredible. You're borrowing at 1.248%, albeit secured. Wow

[kiethton]

MrJuice said:

James_B said:

I can see why you’d reject it, it I’m curious as to why you’d go to a company like this in the first place.

I borrowed, secured, from HSBC last year, £500k for £520 a month for ten years, with principal to be returned at the end. The big banks are competitive, pretty honest, and you know where you stand with them.

Do they just not lend on your sort of business, or have you issues in the past that lead them to pass on the deal?

I just can’t imagine popping in to a local shark to check out his rates.

That's incredible. You're borrowing at 1.248%, albeit secured. Wow

<100bps margin is very, very punchy terms wise - far lower than some of the secured loans my old, now liquidated, employer wrote, although secured against property prior to the GFC. I do get that unsecured borrowing is often cheaper given capital ratios but Jesus that's cheap!

[Jockman]

MrJuice said:

James_B said:

I can see why you’d reject it, it I’m curious as to why you’d go to a company like this in the first place.

I borrowed, secured, from HSBC last year, £500k for £520 a month for ten years, with principal to be returned at the end. The big banks are competitive, pretty honest, and you know where you stand with them.

Do they just not lend on your sort of business, or have you issues in the past that lead them to pass on the deal?

I just can’t imagine popping in to a local shark to check out his rates.

That's incredible. You're borrowing at 1.248%, albeit secured. Wow

We borrowed £200k from HSBC 12 months ago, repayable over 3 years. Rate was exceptionally cheap.

[James_B]

MrJuice said:

That's incredible. You're borrowing at 1.248%, albeit secured. Wow

Secured on my home in London, so it wasn’t anything out of the ordinary last year, but yes, in historic terms it seems close to unbelievable.

I generally think that it makes little sense for an individual to borrow money to invest in stocks and the like, but I don’t think, despite being able to pay it down, that I will, it’s just too cheap.

[James_B]

Ossiantoad said:

The thing is James they look like a very legitimate business...

Fair enough.

I wonder who ends up going with them.

I read a trashy crime novel last year where the bad guys used legitimate means to get their hands on some of a firm’s debt or equity, then threats and violence to take over the whole business; this sounds not too many steps above that.

[williaa68]

Try funding circle. If you are an established business, with accounts etc, they should be competitive.

[Ean218]

James_B said:

Fair enough.

I wonder who ends up going with them.

I read a trashy crime novel last year where the bad guys used legitimate means to get their hands on some of a firm’s debt or equity, then threats and violence to take over the whole business; this sounds not too many steps above that.

You don't need to read trashy crime novels, that was exactly the MO of the Impaired Assets division of HBOS in Reading.

[cuprabob]

Ean218 said:

James_B said:

Fair enough.

I wonder who ends up going with them.

I read a trashy crime novel last year where the bad guys used legitimate means to get their hands on some of a firm’s debt or equity, then threats and violence to take over the whole business; this sounds not too many steps above that.

You don't need to read trashy crime novels, that was exactly the MO of the Impaired Assets division of HBOS in Reading.

Noel Edmonds being a high profile casualty of their work.

[James_B]

Ean218 said:

You don't need to read trashy crime novels, that was exactly the MO of the Impaired Assets division of HBOS in Reading.

I’d be very surprised if that were true.

[sunbeam alpine]

I don't understand this.

OK, I'm not in the UK, but banking over here (Belgium) is going the same way as in the UK - closing branches, more internet banking, more difficult to deposit cash (my industry is still to a certain extent cash-based).

I still have a direct telephone number where I can contact our 2 bank managers, even out of hours, and I don't run a mega-business.

[ReaderScars]

James_B said:

I’d be very surprised if that were true.

I think it's been explored quite a bit on PH in the past.

OP, does any part of your income come through paypal? If so you might be eligible for Paypal Working Capital

https://www.paypal.com/gb/workingcapital/

[James_B]

ReaderScars said:

I think it's been explored quite a bit on PH in the past.

I searched, no mentions of violence. As I said, I doubt that it’s true. Have you any links?

[overunder12g]

Another vote for Handelsbanken. A proper bank with humans to speak with.

[ReaderScars]

James_B said:

I searched, no mentions of violence.

Ah, I didn't actually see the mention of violence in the post you're referring to so no, I don't have any info on that.

Incidentally, on reading the linked article published February of this year, the original author states:

"There were also occasions when I feared for my own safety, after parties who had had dealings with Bancroft warned me that he and some of his Quayside colleagues were prone to violence, and I received menacing anonymous phone calls."

This after or during the author's 'dozen or so cases we had forensically investigated', although just that one mention of violence in the article.

https://www.nakedcapitalism.com/2017/02/ian-fraser...

Edited by ReaderScars on Thursday 19th October 23:23

[Ossiantoad]

Thanks for all the suggestions, I'm following them all up.

Called up my local branch of Handelsbanken, got straight through to the manager who took the time to chat with me, returned my calls, answered my emails. Amazing contrast to high street banks.