Finance turned down again.,,,,
Discussion
So, it's happening again...
Over the past few years I've applied for a few different types of financial products in my business name. Each time as part of their on-boarding process I get asked for details of where I conduct my business. As it happens, most of my business is in Africa, China and India.
As is well until I get to this part.
My credit it good.
Twenty years trading history.
Then I mention I work in a few places that aren't plain vanilla and it gets rejected.
Post-Brexit, we're being told to go out and expand our business with these countries.... but it seems that comes with a negative impact if you then want to engage in any UK-based financial services!!
Over the past few years I've applied for a few different types of financial products in my business name. Each time as part of their on-boarding process I get asked for details of where I conduct my business. As it happens, most of my business is in Africa, China and India.
As is well until I get to this part.
My credit it good.
Twenty years trading history.
Then I mention I work in a few places that aren't plain vanilla and it gets rejected.
Post-Brexit, we're being told to go out and expand our business with these countries.... but it seems that comes with a negative impact if you then want to engage in any UK-based financial services!!
If you've not already done so, might be worth you speaking with your local Department for International Trade rep. They have (at least used to have, not had cause to use them recently) a range of financial packages as well as arrangements with lenders and the like whereby they underwrite some of the risk. If not, you may well find they can point you in the right direction. Certainly worth putting a call in.
Aren’t they more interested in where the business is based rather than which countries the money is coming from?
If the company is UK based and paying corp tax etc I find it odd lenders care about source of income.
I know it’s a bit different as it’s personal rather than business but I’ve never had a mortgage lender ask where my business gets it’s money despite that being the only source of my income.
They want to see the accounts and ask why income varies year to year but nothing more.
If the company is UK based and paying corp tax etc I find it odd lenders care about source of income.
I know it’s a bit different as it’s personal rather than business but I’ve never had a mortgage lender ask where my business gets it’s money despite that being the only source of my income.
They want to see the accounts and ask why income varies year to year but nothing more.
trickywoo said:
Aren’t they more interested in where the business is based rather than which countries the money is coming from?
.
Appears not.. had it twice in past year. All OK. All accepted. Then they ask for countries I operate in, and as soon as I mention some African countries, their 'on-boarding' teams decline the application. .
StevieBee said:
If you've not already done so, might be worth you speaking with your local Department for International Trade rep. They have (at least used to have, not had cause to use them recently) a range of financial packages as well as arrangements with lenders and the like whereby they underwrite some of the risk. If not, you may well find they can point you in the right direction. Certainly worth putting a call in.
thanks.. worth a callThe Moose said:
Why not look for a source of private funds?
Are you looking to fund a capital purchase? Is there a concern that the equipment may leave the UK and end up in one of those far flung countries?
Are you personally underwriting the loan?
No, just a simple car finance through the business - so the asset is charged. Company has excellent credit and long history - but as soon as I explain to finance companies that I deal in Africa, they lose interest!Are you looking to fund a capital purchase? Is there a concern that the equipment may leave the UK and end up in one of those far flung countries?
Are you personally underwriting the loan?
trickywoo said:
Aren’t they more interested in where the business is based rather than which countries the money is coming from?
If the company is UK based and paying corp tax etc I find it odd lenders care about source of income.
You would think that! The illogical system of finance we have today dictates otherwise.If the company is UK based and paying corp tax etc I find it odd lenders care about source of income.
My international work is the international development sector (falling loosely under the loose term of 'Foreign Aid'). We work as part of a group of consultancies and consultants within a UK Ltd company. Our clients - as in the people that pay us - are the likes of the UN, The World Bank, GiZ (German Development Bank) EBRD, and the like. So the contracts are solid. We will get paid! The places we are paid to do work include places such as Sierra Leone, north Cyprus, Uganda, Tanzania, Indonesia.... low income and emerging economic regions.
Quite often projects require considerable pre-funding because the contract payment milestones may set the first payment some six months in. Over that six months, we need to book flights, hotels and earn a living. Sometimes we can negotiate a mobilisation fee but not always.
Several times we've sought finance on these projects but never with any success directly - only via DiT or what used to be UK Trade and Investment - and even then it was only partial.
If we wanted to pre-finance a UK project for a UK client - no problem at all. But when we're working for major international development institutions bringing USDs and EURs INTO the UK economy - whilst doing some useful work at the same time - no chance!
My theory is that this type of lending falls into the realms of the departments in banks that focus upon major international trade deals where they're lending out tens and hundreds of millions. A £50k or £100k six month loan is simply of no interest to them.
What kind of institutions are you applying to? High street names?
1) If they can’t provide you lending, they should refer you on to other places that can help you. Or you can contact the British business bank for advice.
2) it may be unrelated to your business health, and more to do with risk and AML concerns. I.e if you are asking for lending related to what’s seen as high risk products in a high risk African country, it doesn’t matter how profitable your business is, it will likely be outside of the banks comfortable level of lending.
1) If they can’t provide you lending, they should refer you on to other places that can help you. Or you can contact the British business bank for advice.
2) it may be unrelated to your business health, and more to do with risk and AML concerns. I.e if you are asking for lending related to what’s seen as high risk products in a high risk African country, it doesn’t matter how profitable your business is, it will likely be outside of the banks comfortable level of lending.
StevieBee said:
If we wanted to pre-finance a UK project for a UK client - no problem at all. But when we're working for major international development institutions bringing USDs and EURs INTO the UK economy - whilst doing some useful work at the same time - no chance!
That's the irony... our businesses bring in 'new' money into the economy, we're not just churning money already here. If the UK is to prosper, it needs to encourage this type of inward-income producing business, but it seems more obstacles are being put in the way, with access to finance being just one of them. On a recent review with my bank, looking at funding possibilities, they excluded 100% of my debtor book in their assessment of my assets! This included letters of credit opened in my favour by their own subsidiaries in Africa! And this is despite a bad debt ratio of just 0.03% over twenty years of trading!
They've also rejigged their domestic banking, such that they no longer allow you to have foreign currency loans and overdrafts.. this is just a basic requirement for a business like mine, and makes the business far less competitive if I have to include FX forward costs in with every deal.
Simpo Two said:
isleofthorns said:
Then they ask for countries I operate in, and as soon as I mention some African countries, their 'on-boarding' teams decline the application.
If something went wrong every time I mentioned Africa I'd stop mentioning Africa.Or is that too easy?
StevieBee said:
At some point in the application process the question will be asked. You would hope that the people in the banks who deal with this can distinguish between Africa as a continent and those countries within that content as doing business in South Africa is an entirely different proposition to Liberia. But my experience tells me this is not always the case.
'Johannesburg' would sound better than 'Africa'. You think of office blocks not elephants...Gassing Station | Business | Top of Page | What's New | My Stuff