Discussion
My reliable handyman tradesman does lots of work for me and works hard.
He has however got himself into a financial pickle with loans, debts etc and has little equity in his mortgaged property nor any other assets.
He came to me, sheepishly, and asked to borrow money in return for giving me free labour going forward for a length of time. About 6k loan and about 70 days free labour.
I don't want to do this because I may/may not need his labour and, once he has got my money he may resent working for me for months afterwards for nothing. He said he would do up to a week per month of free labour to pay back the debt. He couldn't do more than this as he needs to do paid work elsewhere obviously.
I want to help him though as he is a decent bloke.
He has a contract coming up with the government and he will earn £3k from it but can't afford the materials upfront as they won't pay him for 6 weeks.
Would he be able to factor this debt and get paid by a factoring company quicker? What would it cost?
Could he use a crowd funding website do you think?
Or, failing that I may lend him the money but I would have nothing but his word as he has no security. He has a ltd business so I would want the agreement to be against both him personally and his company. In return Id want a share of future turnover of say 10%. Is this fair? How do I get an agreement? What if he and his company just went under?
In return I would tell my contacts about him and could get him infront of large landlords etc so it would boost his business significantly plus he would have had £6k off me upfront.
I don't really want to get involved as its hassle but what should I do? Help him or not? It took guts for him to come to me and I don't just wanna say no but I only know him as my handyman and I don't want to be obliged into helping.
Any suggestions?
He has however got himself into a financial pickle with loans, debts etc and has little equity in his mortgaged property nor any other assets.
He came to me, sheepishly, and asked to borrow money in return for giving me free labour going forward for a length of time. About 6k loan and about 70 days free labour.
I don't want to do this because I may/may not need his labour and, once he has got my money he may resent working for me for months afterwards for nothing. He said he would do up to a week per month of free labour to pay back the debt. He couldn't do more than this as he needs to do paid work elsewhere obviously.
I want to help him though as he is a decent bloke.
He has a contract coming up with the government and he will earn £3k from it but can't afford the materials upfront as they won't pay him for 6 weeks.
Would he be able to factor this debt and get paid by a factoring company quicker? What would it cost?
Could he use a crowd funding website do you think?
Or, failing that I may lend him the money but I would have nothing but his word as he has no security. He has a ltd business so I would want the agreement to be against both him personally and his company. In return Id want a share of future turnover of say 10%. Is this fair? How do I get an agreement? What if he and his company just went under?
In return I would tell my contacts about him and could get him infront of large landlords etc so it would boost his business significantly plus he would have had £6k off me upfront.
I don't really want to get involved as its hassle but what should I do? Help him or not? It took guts for him to come to me and I don't just wanna say no but I only know him as my handyman and I don't want to be obliged into helping.
Any suggestions?
So this bloke is desperate for £6k and has asked you for a loan. Ask yourself why he has approached you and not a normal means of raising capital. I would suggest it is because they would all run a mile.
You cannot get money back from someone who has none. No matter what you secure it against, him or his business. If he has no money, he has no money. If he goes bust, it's not because he is going to retire to the Cayman Islands with his millions, it's because his liabilities outstrip his assets and he can't juggle one against the other any more.
Why does he need the £6k? To buy materials for a £3k job? Err.......
And nobody is going to give you 10% of future turnover. Who do you think you are Duncan Bannatyne?
Politely decline and leave it at that. Or, if you can afford to lose £6k, go ahead. Because never ever lend what you cannot afford to walk away from.
You cannot get money back from someone who has none. No matter what you secure it against, him or his business. If he has no money, he has no money. If he goes bust, it's not because he is going to retire to the Cayman Islands with his millions, it's because his liabilities outstrip his assets and he can't juggle one against the other any more.
Why does he need the £6k? To buy materials for a £3k job? Err.......
And nobody is going to give you 10% of future turnover. Who do you think you are Duncan Bannatyne?
Politely decline and leave it at that. Or, if you can afford to lose £6k, go ahead. Because never ever lend what you cannot afford to walk away from.
I would politely say that all your cash is currently tied up and that you're not in a position to help him financially.
However, you obviously like the chap, so if you want to help, but without the financial commitment, you could offer to help him get his finances under control or help him find some new work.
However, you obviously like the chap, so if you want to help, but without the financial commitment, you could offer to help him get his finances under control or help him find some new work.
Tyre Smoke said:
So this bloke is desperate for £6k and has asked you for a loan. Ask yourself why he has approached you and not a normal means of raising capital. I would suggest it is because they would all run a mile.
You cannot get money back from someone who has none. No matter what you secure it against, him or his business. If he has no money, he has no money. If he goes bust, it's not because he is going to retire to the Cayman Islands with his millions, it's because his liabilities outstrip his assets and he can't juggle one against the other any more.
Why does he need the £6k? To buy materials for a £3k job? Err.......
And nobody is going to give you 10% of future turnover. Who do you think you are Duncan Bannatyne?
Politely decline and leave it at that. Or, if you can afford to lose £6k, go ahead. Because never ever lend what you cannot afford to walk away from.
Yes, he freely admits other companies would run a mile.You cannot get money back from someone who has none. No matter what you secure it against, him or his business. If he has no money, he has no money. If he goes bust, it's not because he is going to retire to the Cayman Islands with his millions, it's because his liabilities outstrip his assets and he can't juggle one against the other any more.
Why does he need the £6k? To buy materials for a £3k job? Err.......
And nobody is going to give you 10% of future turnover. Who do you think you are Duncan Bannatyne?
Politely decline and leave it at that. Or, if you can afford to lose £6k, go ahead. Because never ever lend what you cannot afford to walk away from.
He needs the £6k for materials plus other stuff which ive not figured out yet.
This sounds shockingly similar to as situation I was in.
A (very close) friends other half restored camper vans, he needed £6k to complete one, once completed I'd get my money back + an agreed sum + he would do some work to my car (350Z)
Long story short, the money went on rent arrears, he hadn't allowed enough/wasted it/ate it, he wasn't completing work fast enough (at all) and in the end I had to pull my 350Z from him half finished as it just sat there gathering dust for months, and had to pay £2k for work elsewhere. He then went completely bust and disappeared. Haven't seen him since!
I cleared his unit including the camper van and eventually got most of my money back but I would never do it again.
He had a proper unit, "jobs" etc so it all looked good, but I learnt a very big lesson on what's actually real and what looks real.
I would say offer him help/advice more than money, it won't be what he's after but how do you know he'll get the government contract?? As has mentioned before, if he has nothing, you'll get nothing and to be honest the amount he's after doesn't sound enough to get him out of the s**t.
A (very close) friends other half restored camper vans, he needed £6k to complete one, once completed I'd get my money back + an agreed sum + he would do some work to my car (350Z)
Long story short, the money went on rent arrears, he hadn't allowed enough/wasted it/ate it, he wasn't completing work fast enough (at all) and in the end I had to pull my 350Z from him half finished as it just sat there gathering dust for months, and had to pay £2k for work elsewhere. He then went completely bust and disappeared. Haven't seen him since!
I cleared his unit including the camper van and eventually got most of my money back but I would never do it again.
He had a proper unit, "jobs" etc so it all looked good, but I learnt a very big lesson on what's actually real and what looks real.
I would say offer him help/advice more than money, it won't be what he's after but how do you know he'll get the government contract?? As has mentioned before, if he has nothing, you'll get nothing and to be honest the amount he's after doesn't sound enough to get him out of the s**t.
I suspect the best next step would be CAB or equivalent for some advice on getting the debts restructured.
It is never the answer to just borrow more money to sort out debts which are already out of control...
he won't get invoice financing etc. against his new work as the credit rating will be based on him as well as the contract, and even if he did it would only be for a % of the bill (e.g. perhaps 80-85%) Invoice financing is also to cover the period of payment and generally won't be advanced prior to work done as the asset for security is the invoice and the invoice has no validity until the work is done...
It is never the answer to just borrow more money to sort out debts which are already out of control...
he won't get invoice financing etc. against his new work as the credit rating will be based on him as well as the contract, and even if he did it would only be for a % of the bill (e.g. perhaps 80-85%) Invoice financing is also to cover the period of payment and generally won't be advanced prior to work done as the asset for security is the invoice and the invoice has no validity until the work is done...
MrSparks said:
This sounds shockingly similar to as situation I was in.
A (very close) friends other half restored camper vans, he needed £6k to complete one, once completed I'd get my money back + an agreed sum + he would do some work to my car (350Z)
Long story short, the money went on rent arrears, he hadn't allowed enough/wasted it/ate it, he wasn't completing work fast enough (at all) and in the end I had to pull my 350Z from him half finished as it just sat there gathering dust for months, and had to pay £2k for work elsewhere. He then went completely bust and disappeared. Haven't seen him since!
I cleared his unit including the camper van and eventually got most of my money back but I would never do it again.
He had a proper unit, "jobs" etc so it all looked good, but I learnt a very big lesson on what's actually real and what looks real.
I would say offer him help/advice more than money, it won't be what he's after but how do you know he'll get the government contract?? As has mentioned before, if he has nothing, you'll get nothing and to be honest the amount he's after doesn't sound enough to get him out of the s**t.
Sound advice, thanks.A (very close) friends other half restored camper vans, he needed £6k to complete one, once completed I'd get my money back + an agreed sum + he would do some work to my car (350Z)
Long story short, the money went on rent arrears, he hadn't allowed enough/wasted it/ate it, he wasn't completing work fast enough (at all) and in the end I had to pull my 350Z from him half finished as it just sat there gathering dust for months, and had to pay £2k for work elsewhere. He then went completely bust and disappeared. Haven't seen him since!
I cleared his unit including the camper van and eventually got most of my money back but I would never do it again.
He had a proper unit, "jobs" etc so it all looked good, but I learnt a very big lesson on what's actually real and what looks real.
I would say offer him help/advice more than money, it won't be what he's after but how do you know he'll get the government contract?? As has mentioned before, if he has nothing, you'll get nothing and to be honest the amount he's after doesn't sound enough to get him out of the s**t.
akirk said:
I suspect the best next step would be CAB or equivalent for some advice on getting the debts restructured.
It is never the answer to just borrow more money to sort out debts which are already out of control...
he won't get invoice financing etc. against his new work as the credit rating will be based on him as well as the contract, and even if he did it would only be for a % of the bill (e.g. perhaps 80-85%) Invoice financing is also to cover the period of payment and generally won't be advanced prior to work done as the asset for security is the invoice and the invoice has no validity until the work is done...
Ok, great info, thanks. I may just give him advice and tell him about invoice financing etc.It is never the answer to just borrow more money to sort out debts which are already out of control...
he won't get invoice financing etc. against his new work as the credit rating will be based on him as well as the contract, and even if he did it would only be for a % of the bill (e.g. perhaps 80-85%) Invoice financing is also to cover the period of payment and generally won't be advanced prior to work done as the asset for security is the invoice and the invoice has no validity until the work is done...
He has older parents that have a house debt free but he doesn't want them to be a guarantor.
His partner doesn't want to go through their personal finances, only those of the business.
Those two points are making me think I'm out, plus what you guys have said.
Point him at Stepchange Debt Charity, they'll help him work through the situation with his debts and come up with some possible solutions. These might include a debt restructure, an IVA, a bankruptcy or just a short term holiday while things get worked out. They're in a better position to work with him than you are. It sounds like it's more personal debt than business and it's that that's stopping him doing things.
£6k will barely touch the sides, mortgage, utilities and council tax will all be the first line things that have to be paid from that, I'd imagine that sort of figure would last him 2 months, maybe 3 and he'll not be able to take on the £3k Gov contract if there's not much else coming in, so that's maybe a pipe dream
£6k will barely touch the sides, mortgage, utilities and council tax will all be the first line things that have to be paid from that, I'd imagine that sort of figure would last him 2 months, maybe 3 and he'll not be able to take on the £3k Gov contract if there's not much else coming in, so that's maybe a pipe dream
Edited by andy-xr on Wednesday 4th March 09:11
jonah35 said:
He has however got himself into a financial pickle with loans, debts etc and has little equity in his mortgaged property nor any other assets.
If he's a good and reliable tradesman then he shouldn't be in a pickle - so the problem is not his work, it's his inability to manage money. And he's unlikely to manage yours any better than anybody else's.Hence there is a significant risk you will end up as another piece of diced vegetable in the Branston pickle jar.
Its hard enough getting my good reliable joiner to come finish my wooden floor, that he's due £300 for. Imagine getting one round to do "free" work on money he has already got...
If you can afford to withdraw 6k in cash right now, and place the lot on black without any hesistation or regret if red comes up, then why not. I suspect you dont, so stay well clear.
Or blame the wife. She's the boss and wont let you and your hands are tied.
If you can afford to withdraw 6k in cash right now, and place the lot on black without any hesistation or regret if red comes up, then why not. I suspect you dont, so stay well clear.
Or blame the wife. She's the boss and wont let you and your hands are tied.
hotchy said:
Its hard enough getting my good reliable joiner to come finish my wooden floor, that he's due £300 for. Imagine getting one round to do "free" work on money he has already got...
If you can afford to withdraw 6k in cash right now, and place the lot on black without any hesistation or regret if red comes up, then why not. I suspect you dont, so stay well clear.
Or blame the wife. She's the boss and wont let you and your hands are tied.
Again, point taken.If you can afford to withdraw 6k in cash right now, and place the lot on black without any hesistation or regret if red comes up, then why not. I suspect you dont, so stay well clear.
Or blame the wife. She's the boss and wont let you and your hands are tied.
I will avoid lending the money.
However, what can I do to help?
He is good, diligent and works all hours,Friday nights, weekends etc for me. Never overcharges and goes above and beyond.
But I pay him like clockwork and am fair.
My logic is if he isn't making ends meet now then how will this one job sort things out. He did mention he wanted a holiday too come to think of it!
I think he could build up a great business.
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