How easy is it to get an overdraft at the moment?

[BrightIdeas]

How easy is it for new start companies to get short term funding at the moment?

I applied for a small overdraft (£4k) for cashflow purposes and am waiting to hear back.

My business started trading 7 months ago (as a ltd).

[fundingportal]

Much will depend on

A) business performance to date and
B) Additional security available.

You might do better to investigate invoice finance (assuming you offer trade terms)

[BrightIdeas]

Thanks for taking the time to reply...

We are B2C, so do not offer trade terms.

[Paul Norman]

The answer, regretably, is not easy, and not cheap.

However, your bank have taken an application from you..a good start. They should have given you a time scale to hear back. It is likely, for a newish start, they will ask for personal garuntees. And charge a robust fee for setting it all up.

[internetspaceships]

By "robust" you mean ridiculous of course!

[Click2Post.co.uk]

I can tell you HSBC charged me between £200 and £300, then the renewal each year is £180 (I think).

We have a £4,000 overdraft which has only been used for 3 days in a whole year but they wouldn't budge on the fee's. If you want to increase the overdraft, they charge the fee again!

Oh, and personal guarantee's were required.

[BrightIdeas]

Looks like the answer is indeed 'not easy'...

I'm currently waiting to hear back from an appeal after they declined the overdraft - even with DPG (which I was quite surprised about). The application fee was £50... can't remember the rate.

So far, I'm finding it quite a frustrating process with lack of good customer service.

Anyway, fingers crossed...

[mrhubby]

Keep your head up the first year is always the hardest.

There are other ways of getting funding including getting an investor.

Also looking at your margins and seeing if you can improve this to assist.

Dependant on product range then possibly look at offering trade terms then other funding options could be open to you. If you want some advice then please feel free to pm me

Good luck in 2011

Richard

[BrightIdeas]

An update on this - the appeal was successful, which I'm thrilled about for that little bit of piece of mind that it gives me. They approved a slightly lower limit of £3k, which should be absolutely fine. They want a DPG too though but I don't really have a problem with that.

[fundingportal]

An update on this - the appeal was successful, which I'm thrilled about for that little bit of piece of mind that it gives me. They approved a slightly lower limit of £3k, which should be absolutely fine. They want a DPG too though but I don't really have a problem with that.


Very pleased to hear you were successful.

I would have been very worried if you weren't prepared to offer a PG to support your business!

[littlebiz]

We've had a £3k overdraft facility for a couple years. It cost around £180 to set up, and we just paid the same to have it another year. But those 'helpful' people at NatWest have just informed us that they have had 'concerns' we we 'should have been informed of' (which we weren't) and have pulled it. So we have 30 days to cover it and get another bank account up and running.

Moral is, if you bank with NatWest don't rely on them to keep their promises/stick to their customer charter or `SME charter.

NatWest really are best avoided by the small business.

[littlebiz]

Sorry computer decided to hang and I ended up posting twice.

[KernowQueen]

. But those 'helpful' people at NatWest have just informed us that they have had 'concerns' we we 'should have been informed of' (which we weren't) and have pulled it.

can you clarify that please, Natwest should have been advised about concerns within your business? is that what you mean?

i think it's belts n braces across the board where finance is concerned at the moment. their just reducing their risk, which is exactly what we're doing as a company (as are many more) & keeping a much tighter control on credit. i know that doesn't help you & i guess i'd feel similar if our o/d was suddenly whipped away.

[littlebiz]

hi Kernow Queen, no, NatWest said "we write with reference to our concerns about the present position of your account. You should have already been notified of these concern..."

They had not notified us of their 'concerns'. And they have only a couple of months charged us for the renewal of the overdraft.

[KernowQueen]

hi Kernow Queen, no, NatWest said "we write with reference to our concerns about the present position of your account. You should have already been notified of these concern..."

They had not notified us of their 'concerns'. And they have only a couple of months charged us for the renewal of the overdraft.

ah right, were these concerns in place at the time you renewed the overdraft? if so, i'd be pushing them for a refund of the fee i think, especially if you weren't aware of any issues. if they had concerns, how did it pass the checks for a renewal to go ahead? might be worth a try, you've been with them for a while & they can only say no! :)

[littlebiz]

Hi - no, they didn't mention any 'concerns' when they took the money. Nor did they mention them when they started having them, whenever that was. I've already written to ask for the fee to be returned. Meanwhile, preparing to transfer credit card machine and everything to a more helpful bank.

[fundingportal]

We've had a £3k overdraft facility for a couple years. It cost around £180 to set up, and we just paid the same to have it another year. But those 'helpful' people at NatWest have just informed us that they have had 'concerns' we we 'should have been informed of' (which we weren't) and have pulled it. So we have 30 days to cover it and get another bank account up and running.

Moral is, if you bank with NatWest don't rely on them to keep their promises/stick to their customer charter or `SME charter.

NatWest really are best avoided by the small business.

Sorry to hear of your plight, however the bigger message isn't 'avoid Nat West' it is 'use the appropriate form of funding'.

It is always alarming the number of people on forums such as this who sweepingly describe overdraft as the 'best' or 'cheapest' form of finance; everything is deopendent on circumstances and needs. Overdrafts were always intended as 'rainy day' facilities to be dipped in and out of occasionally. Reading between the lines (and without any knowledge of your circumstances) it might be the case that your overdraft had become core borrowing - which is not its purpose.

For future borrowers, the 'right' solution might be overdraft, term loan, EFG, invoice finance, HP/Leasing, mortgage or even payday loan - no one on here can properly advise you without knowing your circumstances.

[accountancyextra]

Interestingly, a client of ours applied and was accepted for an overdraft of £10,000 a couple of years back...it was there purely as a cashflow fallback (the rainy day scenario). they didn't use above £2,000 of it at any time and the bank have now pulled the whole thing as they "didn't need it". Three weeks later, they did...but the bank refused to reconsidera s they have an internal policy of only reviewing overdrafts once a year.

Needless to say, one furious customer, quickly became an ex customer

[KernowQueen]

Interestingly, a client of ours applied and was accepted for an overdraft of £10,000 a couple of years back...it was there purely as a cashflow fallback (the rainy day scenario). they didn't use above £2,000 of it at any time and the bank have now pulled the whole thing as they "didn't need it". Three weeks later, they did...but the bank refused to reconsidera s they have an internal policy of only reviewing overdrafts once a year.

Needless to say, one furious customer, quickly became an ex customer

that doesn't fill me with confidence :(. we've had an o/d for years with Natwest, we used it regularly until last summer & have managed to keep a healthy balance since then. however, trade has slowed down again now & my cashflow predictions for the coming months will have us firmly in the red - but only after we've paid a large bill that becomes due in June.

i'm pretty sure our o/d renewal is in June too so I think I'll be pro-active & contact our business manager sometime soon just to confirm that we will need it, even if we haven't used it for a year.

[internetspaceships]

Good points here, we have a fairly large facility with Barclays. I make a point of dipping 25k into it each month on principle, just for a day so they can never say "you don't need it let's have it back."

The banks operate on a basis of reducing what they call "hard borrowing" i.e. using an overdaft at 90% constantly so they look at converting those to loans.

If you dip in for a very short time to approx 50% capacity on a regular monthly basis you get the best of both worlds, i.e. they see we use it, and it's not "hard."