Business Account Overdraft/Closing Business

[LordSuggs]

Hi all,

 

I have 2 business accounts with Barclays

- one as a sole trader which I started as and

- one as a Limited Company, which I became a few years ago.

 

Unfortunately Covid has hit my business model hard and I've made the decision to cease trading to focus on another project.

 

The issue is that I have two overdrafts that need clearing

-  £1750 on Ltd and

 - £700 on ST

both of which are accumulating bank charges.

 

My accountant has advised I get a personal loan to pay off the debt before closing the Ltd.

I've spoken to Barclays and they have said that is likely the best option as if it goes to Collections that will affect my credit. 

 

I'm wondering if anyone has any suggestions about the best option when it comes to clearing this amount

- is a loan the best option or would a credit card be better?

 

I think realistically I could clear off the balance within 3-6 months but thought I'd check here before sending out any applications.

[BazzaS]

Did you sign any personal guarantee for the Limited Company?

 

If not, why does the accountant feel the Ltd Co will impact your personal credit report? 

Edited December 9, 2020 by BazzaS

[LordSuggs]

Hi Bazza. I'm trying to track down original bank docs (can't see anything in online banking docs), but I think there was.

 

It was the Barclays rep who said that if I progress through to Collections Department it will affect on my persona credit report. 

The accountant is more concerned with the Sole Trader account which is a lower amount

[BazzaS]

I’m not saying they were lying, but if there was no PG then the Barclays rep might have been mistaken.

If there was no personal guarantee (& absent e.g wilful misconduct) then the Ltd Company debt can’t affect you personally - which is one of the reasons / ethos behind a Ltd Co : limited liability.

 

Bear in mind the Barclays reps likely have Barclays interests rather than your interests as their focus.

 

if there was no PG, it’s no surprise your accountant said to prioritise the Sole Trader debts, for which you can be personally liable.

Edited December 11, 2020 by BazzaS

[LordSuggs]

Thanks that's really helpful - I can't locate the original paperwork, so may have to put. in an SAR on that. 

 

I'm prioritising the Sole Trader account and will clear that off before the end of the year. While waiting on the SAR I'm guessing I can't do anything with regards closing the Ltd.

[dx100uk]

pers i find it disturbing and not good practice to takeout more credit to pay of existing credit.

if there is not PG, they can go whistle.

 

are your sources of income going into either account?