Irresponsible lending by Funding Circle??

[Anon00954]

I was running a small but profitable limited company and paying myself just enough to meet my household expenses. Then a broker approached me offering me loan from Funding Cirlce just as i was exploring another project... one thing led to another and I ended up taking a huge loan, biggest mistake of my life! because after a series of unfortunate events the project more or less didn't succeed. Now my ltd company is heading towards insolvency and I may possibly file for personal bankruptcy. This new project took my initial profitable part of the business down with it and now i dont have any income. I offered FC a one time full and final but they rejected saying they prefer a long term restructuring, which is useless since i dont forsee my situation improve. After weeks and weeks of distress, depression and shame slowly turned to anger. In all earnest i take responsibility for my decision and feel terrible for the investors but why would FC provide me easy loan with very little vetting (they just asked for 3 months bank stat, 2 year end accounts and personal asset/liab statement). The way i am beginning to see it is that their easy loan made me lose my profitable business and now their personal guarantee means they have right to my share of house equity (which is really minimal anyway) and family car. My world is completely turned upside-down. I read lots of news saying lots of small businesses have gone under because of this. Is this not irresponsible lending?? isnt there a legal recourse? Please advise!

 

[Nico Albrecht]

Stop blaming others for your mistakes. I think the word accountability is used very little these days and replaced by excuses.....

 

[Anon00954]

Stop blaming others for your mistakes. I think the word accountability is used very little these days and replaced by excuses.....

I have said i take responsibility for my actions but I think you are missing the point. Its a policy issue isnt it?

 

[Bluejen84]

I have said i take responsibility for my actions but I think you are missing the point. Its a policy issue isnt it?

No I'm sorry things haven't worked out but at no point have you explained why it was there loan that caused it to fail?

You described a "series of unfortunate events".

I appreciate a you're in a desperate situation and probably clinging to this as a solution to save it.

 

[Alan]

The way i am beginning to see it is that their easy loan made me lose my profitable business

This seems irrational and inconsistent with

In all earnest i take responsibility for my decision

Can you explain how by having money you made your profitable company unprofitable?

 

[Gordon - Commercial Finance]

The way i am beginning to see it is that their easy loan made me lose my profitable business

Yes it is often the case that more cash can kill a business.

 

[Anon00954]

This seems irrational and inconsistent with



Can you explain how by having money you made your profitable company unprofitable?

I used the loan For a project that didn’t take off (as life happens) which took the whole ship down incl my earlier biz as it was same entity

 

[Mark T Jones]

The law allows us to assume that business owners are capable of making informed decisions.

if that were to change then frankly nothing would ever get done

It’s a shame that things didn’t work out, but your financial predicament is the result of your decisions.

 

[Mr D]

I used the loan For a project that didn’t take off (as life happens) which took the whole ship down incl my earlier biz as it was same entity

So you were forced to sign paperwork and spend money?

Not following how you were forced against your will to take on debt and spend the money in such a way as to lose it.

While you can have responsibility, cannot see how the lender does.
Application, paperwork signed, money handed over - what is the irresponsible bit by the lender there?

 

[JEREMY HAWKE]

It is very clear at the point of signing this agreement that the OPs life would be in a mess should they default on the loan
I am assuming the OP was aware of this on reading the terms and conditions and paying a solicitor to check it .
FC provide good finance to business but if you don't want to take the risk then you don't take on the loan

 

[obscure]

What a truly bizarre OP.

They didn't force you do do this project that had the potential to kill your existing business if it failed - something that you should have known.
They didn't force you to take the money.
They didn't cause any of the series of unfortunate events - and they weren't the one whose job it was to deal with them.

You may be at the bottom of a large hole but it's clear that the only fingerprints on the shovel are your own.

 

[fisicx]

I used the loan For a project that didn’t take off (as life happens) which took the whole ship down incl my earlier biz as it was same entity

The FC loan wasn't the problem, i t was the failure of the project. If the project had been successful would you still be complaining?

 

[Mark T Jones]

Moving on, it’s not unusual to look around for scapegoats but ultimately it isn’t going to help you

The insolvency laws in this country are pretty good and are designed to protect you from the worst mental and practical effects of this type of situation (not, as some would have you believe, as a way to get stuff at the expense of others)

I suggest that you pop onto the insolvency section of this forum and/or seek professional insolvency advice

 

[STDFR33]

very little vetting (they just asked for 3 months bank stat, 2 year end accounts and personal asset/liab statement).

What other vetting would you have liked them to have done?

They are a lender. They cannot make business decisions for you and it is your decisions that led to the failure of the company.

This project took down the other part of your business. Did you consider doing the project as a separate limited company? Did you take professional advice?

 

[BusterBloodvessel]

I've heard it all now...good God.

Imagine if your second business had been a roaring success. If they'd have come to you and said 'our cash made that happen - we want you to pay us back even more than agreed please' - then I'm sure you'd have been happy with that. Right.....?

I genuinely am sorry that your businesses have gone under. But no, it's not in the slightest way Funding Circles fault.

 

[Guy Incognito]

Interesting as we found Funding Circle very tight on their restrictions, they would only take filed accounts rather than current year earnings, so they were not the best source for us.
We now use Clearbanc who are disrupting the lending space for e-commerce retailers like us who found it very difficult before due to our rapid growth. Affordable fees and a clear payment schedule, very simple process. Highly recommended.

 

[Mr D]

Interesting as we found Funding Circle very tight on their restrictions, they would only take filed accounts rather than current year earnings, so they were not the best source for us.
We now use Clearbanc who are disrupting the lending space for e-commerce retailers like us who found it very difficult before due to our rapid growth. Affordable fees and a clear payment schedule, very simple process. Highly recommended.

So that company saw a problem, worked out a solution and set up shop dealing with it.
Thanks for the tip, will keep an eye on them. No desire for lending yet but one day maybe.

 

[NickGrogan]

one thing led to another and I ended up taking a huge loan

What? You accidentally borrowed a huge amount of money?

I presume that you called Funding Circle immediately when the money appeared in your account, explained the error and sent the money back to them.

 

[Guy Incognito]

So that company saw a problem, worked out a solution and set up shop dealing with it.
Thanks for the tip, will keep an eye on them. No desire for lending yet but one day maybe.

Yep - similar to PayPal Working Capital (also highly recommended) but for higher figures. PayPal gave us a 5 figure sum for a fee of 3.8%.

Clearbanc look at historical sales and take a % of future sales in a similar way. Higher fees but instantly available capital - and if you use it for advertising spend the fee actually decreases.

Compared to Funding Circle / banks either are much better options for e-commerce businesses or rapidly growing businesses.