Shan
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APR on potential bank loanWe were just quoted 18.9% APR on a potential bank loan from Barclays! That is eye watering! 
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Lorrainelovesplants
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Have you seen those ads on the telly?
Over 2000 %APR
No wonder people are financially in a mess.
Ive told my kids if they ever need money to come to mum first.
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vegplot
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NatWest business loans are 7.4%, personal loans just over 11%. Barclays appears to be taking the michael.
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Rob R
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HSBC is 9.9% personal and from 7.9% AIR (plus £100 one-off fee), I've got a loan with them, no problems so far.
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bagpuss
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| Lorrainelovesplants wrote: | Have you seen those ads on the telly?
Over 2000 %APR
No wonder people are financially in a mess.
Ive told my kids if they ever need money to come to mum first. |
Those rates are for high risk short term payday loans or legalised loan sharking in other words
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Shan
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| vegplot wrote: | | NatWest business loans are 7.4%, personal loans just over 11%. Barclays appears to be taking the michael. |
Barclays claims on it's website that business loans are "from" 8.9% - I'm guessing Natwest do the same.
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Rob R
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I wouldn't take a NatWest loan if they were offering it at 0%
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Shan
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The thing is, our business account is with Barclays and most banks seem to want you to have a business account with them so you can take out a loan. I just can't be doing with all the hassle!
I'm thinking, I might not take the loan. Things might be tight for a bit but I am good at juggling, alternatively, take the loan and pay off as quickly as possible. The interest is deductible anyway.
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bagpuss
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| Shan wrote: | The thing is, our business account is with Barclays and most banks seem to want you to have a business account with them so you can take out a loan. I just can't be doing with all the hassle!
I'm thinking, I might not take the loan. Things might be tight for a bit but I am good at juggling, alternatively, take the loan and pay off as quickly as possible. The interest is deductible anyway. |
what are the overpayment penalties like?
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Shan
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There are none, so it makes sense to pay it off as quickly as possible.
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bagpuss
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| Shan wrote: | | There are none, so it makes sense to pay it off as quickly as possible. |
Indeed, that is surprising in my experience they generally charge you at least a months interest to repay early
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Shan
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This will be the 2nd loan if we take it. The last one didn't have a penalty and the chap on the phone claims this one doesn't either. I'll wait to see the paperwork!
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Rob R
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APR is the equivalent of all the interest paid over 12 months + any arrangement fee divided by the number of years and divide that by loan amount, is that correct?
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Shan
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Yes, that's right.
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Rob R
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Thanks, just checking 
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dpack
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i have an open offer of a decent lump at 19% ,he didnt quite understand why i wasnt thrilled even though i could use whatever i bought as security
at those sort of rates most business reasons for using borrowed money dont add up
over the years i have decided borrowing a few grand is a burden i dont need but i would go for a huge amount if the business required it and the deal looked sweet to me and the bankers
many years ago a client/pal of mine after 18months of madness trying to build 6 houses and sell them said"borrowing 3 mil was silly ,i should have gone for the 30 and done a proper one ,same work but ten times the profit "
investment in plant and equipment needs careful maths as to if a loan is sensible
borrowing for a speculative venture is ok if one is prepared to run if it goes horribly wrong 
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Shan
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It's so that I can increase production and it eases cash flow when I most need it. It can be repaid quite quickly but I am still horrified at the cost. Whilst the interest is deductible, it makes the monthly repayments quite high.
Their excuse is tht it is risky to loan money - but this only makes it riskier because it affects cash flow.
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Rob R
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Can't you tell them it is for an asset, do they actually check?
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dpack
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loans ,factoring etc do not ease cash flow ,good credit control does ,
i had to change banks one afternoon when the new branch manager decided to stuff me after many years by refusing 10k for materials i needed before my clients cheque cleared ,i was mighty unhappy and lost a day re financing ,it aint always that happy a result ,i know many stories of banks ruining viable business by pulling working capital
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Shan
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Actually, it will ease cash flow for a few months and it's not about lack of credit control. We have very few customers on account and they are all good payers. This is about having to pay out for chemicals and cylinders ahead of receiving them or even selling them and then still having to invest in better plant equipment for increasing productivity.
Yes, we can do this without the loan but organic growth will take a whole lot longer. Currently, we have a good few businesses that would like to buy from us but we have not taken them on because we would not be able to service them properly without investing in our ability to increase production.
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Rob R
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How much are we talking here? Might you be better (particularly in terms of cashflow) taking a fixed rate over a longer period? Or for a shorter term lower amount my o/d is only about 8% APR variable and loan 5% fixed.
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crofter
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Yes, I would suggest an overdraft as well. If you have a viable business and can offer security, you should be able to get one for a few percent over base + arrangement fee (rate and fee are both negotiable, even if the bank manager suggests otherwise)
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Penny Outskirts
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Overdraft for temporary cash flow, loans for capital and long term committments.
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Shan
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I don't like the idea of an overdraft. I is too easy for them to whip the facility away from you. This happened to the last company my OH worked for.
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Shan
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We are talking £15,000.
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Rob R
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For that type of sum I'd seriously consider changing banks as even a few percent can cost a lot in the long run, even though it's a bit of hassle the introductory free banking more than makes up for that. Of course, it might be influenced by what your local branches are like, we've got a good one with real people keen to help.
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crofter
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| Shan wrote: | | I don't like the idea of an overdraft. I is too easy for them to whip the facility away from you. This happened to the last company my OH worked for. |
Yes, overdrafts are repayable on demand, but if you have a solid business, you give the bank a business plan and cashflows and stick to what you said you would do, it is unlikely they will ask for repayment. They *might* but I would risk it.
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Shan
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They didhave a solid business but their sister company had bought another business that was less solid, the bank got nervops and whipped away their overdraft.
I wouldn't risk an overdraft.
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dpack
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if the extra business/efficiency gain more than generate the interest and repayment regime a loan gives a known future that an od will not
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crofter
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| dpack wrote: | i have an open offer of a decent lump at 19% ,he didnt quite understand why i wasnt thrilled even though i could use whatever i bought as security
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That reminds me of the 1980s... never want to be there again (although it was a mere 16%)
| Shan wrote: | | I wouldn't risk an overdraft. |
Maybe wise, given the current economic situation.
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