Natwest small business loan default - ignored my letter, no help on phone!

[neeny]

Hi guys,

Trying to keep it short - sole trader, trading for three years. We are just making enough to live on at the moment, but we are expanding and I have confidence for the future that we are viable.

 

I had a loan from Natwest for £4800. At the time I was offered longer payment terms but declined because I could afford the payments at that time.

 

Loan now down to £2800, but after that horrible winter we all had (50% trade for a month), then a surprise bill from HMRC requiring immediate payment, plus the run of bank holidays that took about 40% of trade for two weeks, we haven't made enough to pay off anything towards the loan for 6 months now.

 

We pay all suppliers cash on delivery and staff in cash to keep bank charges down, so not a lot goes through the account, just enough to cover DDs.

 

I spoke to my business manager who said that there needed to be a lot more money going through the account for three months before I could be offered any help!

 

One phone operator said I could reduce my payments to £100 per month for a short time, but the paperwork never arrived to sort this out.

 

I wrote to them two weeks ago offering £50 each month (I have made the first payment of this) for six months then normal payments after that, and in response I have received a default notice demanding £900 arrears by the 28th June, and if this is not paid they will demand full payment.

 

They have threatened to take my equipment which is worth less than £1000 total, but that would close my business down completely.

 

Any advice please? I'm 33 weeks pregnant with our first, and employ my best friend, mother and sister! This is getting quite stressful :S

[elsinore]

They have threatened to take my equipment which is worth less than £1000 total, but that would close my business down completely.

 

 

Hi neeny.

 

That reads as if the bank have secured the loan on the business equipment, is that so?

 

Els

[neeny]

Thanks for responding - no, it's an unsecured loan.

[elsinore]

So, how have they threatened you? They would first have to take you to court, win the case and then, if you did not pay, send bailiffs to seize goods. As far as I am aware they cannot seize 'tools of the trade'.

 

All that is a long way off, so don't worry about it.

 

Is it possible for you to raise the £900 to clear the arrears by 28th June? That would give you some breathing space and take the pressure off.

Could friends and family chip in, can you find some from credit cards, perhaps stop paying for non-essentials for a few weeks, that sort of thing? Even get agreement from your colleagues to work for half pay for a short time (that presumes that they are aware of the situation).

 

Even better would be to pay off the loan altogether. I know I'm perhaps making it sound easy and I know it's not but you need to get out of the bank's grip if possible.

 

As you are self-employed, you can operate using a personal account (especially as all your transactions seem to be in cash) preferably with another bank.

 

Els

[neeny]

Hi again, and thanks.

I think the letter was something along the lines of they would 'apply to send bailiffs to seize assets'. They sent me a form to fill in listing assets and their value, and personal assets also. I didn't return it because I'm sure only a court can ask for that info.

 

I know that it needs to go to court first, but I have no experience as to whether business loans are handled differently to personal loans in a court.

I have no way of raising any more money than what I've told them - family are already rallying around to help with baby costs, and offering to work a few free hours here and there, I don't feel like I can ask for more!

I already pay a lot of cheeky payments through my personal account because I don't get charged for them.

 

I think I feel better that you have said they shouldn't be able to seize tools, and that the court process is exactly what I thought it was. If it is a long way off, I should be back to work after maternity leave, I can then cut down on staff wages and get back on top! Trade is on the up so I am hopeful. Thank you so much for your response.