Lloyds Bank - Business Overdrafts... reviews...

[StefanChelt]

Hello all,

Wondering if anyone here has experience of Lloyds and their business overdraft reviews.

My company has been with Lloyds for a decade or so - but the last 3 years we've been heavily relying on our overdraft. Last year we had a blow when one of our biggest clients Carillion went into liquidation - but we just about survived. It's taken until this last month or so to get back towards the black but things are on the up slowly.
Our business manager who had always been supportive retired just before Christmas and we're now in the "care" of the small business call centre who don't really seem interested in hearing how things are going.

Lloyds have sent a letter today "reminding" me that our overdraft facility is due to be reviewed on 23rd July. Does anyone know what the negative outcomes of such a review can be - my concern at this point is they could immediately turn off the facility without notice...

As is the way of things - given another 90 days or so we'll probably be back in the black more consistently and relying on it less, but this review has popped up a little earlier than is comfortable.

Thanks in advance for any thoughts,

Stefan

 

[Mark T Jones]

There is a high chance that they will look to turn it into a term loan. Which might well be the appropriate borrowing for you. (Actually it’s probably best to do part loan, part overdraft dependent on trends)

I’m assuming there is s PG in place. They might fish for additional security it’s worth standing your ground.

 

[Socio South West]

Probably because you had an overdraft and were looking suspect was the reason that you had a dedicated business manager for so long.
I experienced the same 'ABC' attitude when Tw@t West wound their small business managers team down a few years ago, and was only too pleased to tell them I had sold the company and wouldn't need the account any longer... but by then I was just Another Bl00dy Customer (ABC) anyway....

As @Mark T Jones says, unless you are showing signs of either actively needing the overdraft as working capital, and getting somewhere near the black regularly they will look to get the hardcore element of the overdraft converted to a loan, and bang you hard to get it secured if it isn't already.

 

[Ian J]

There is a high chance that they will look to turn it into a term loan. Which might well be the appropriate borrowing for you.

They could also try and introduce them to Lloyds factoring company

 

[JEREMY HAWKE]

They may also take into consideration the credit risks you are taking with your customers along with the time customers take to pay .
They may also be looking at your profit margins as many of Clarions suppliers were working on very low margins and employed this strategy across their whole book

 

[StefanChelt]

There is a high chance that they will look to turn it into a term loan. Which might well be the appropriate borrowing for you. (Actually it’s probably best to do part loan, part overdraft dependent on trends)

I’m assuming there is s PG in place. They might fish for additional security it’s worth standing your ground.

I did sign a PG when opening the account way back when - so yes assuming they've not lost the paperwork a PG is in place.

A term loan wouldn't be a bad idea actually - you think that's more likely than them just pulling the O/D altogether?

They actually wrote to me over a month ago saying it was going to be looked at in the next 7 days and to call them if anything had changed. Called the call centre of relationship managers, let them know about recent challenges and new work wins... guy couldn't wait to get off the phone and seemed totally disinterested. Been half expecting a letter giving notice but nothing until the letter yesterday reminding me the review date is next week.

I'd have thought they'd give some notice if changing things - but very conscious it's a repayable on demand facility.

 

[StefanChelt]

They may also take into consideration the credit risks you are taking with your customers along with the time customers take to pay .
They may also be looking at your profit margins as many of Clarions suppliers were working on very low margins and employed this strategy across their whole book

Good point - although Carillion passed a credit check comfortably 6 months before they went under... now that I use credit insurance I do have a bit more scrutiny going on.

 

[JEREMY HAWKE]

They could also try and introduce them to Lloyds factoring company

Good point - although Carillion passed a credit check comfortably 6 months before they went under... now that I use credit insurance I do have a bit more scrutiny going on.

I don't trust credit checks no more than I trust the snake oil salesmen that told the poor that Brexit would benefit them
Sometimes you just have to go with your gut feeling !

 

[StefanChelt]

They could also try and introduce them to Lloyds factoring company

Ah yes they did try to sell me that service previously...

 

[StefanChelt]

Quite right.

I don't trust credit checks no more than I trust the snake oil salesmen that told the poor that Brexit would benefit them
Sometimes you just have to go with your gut feeling !

 

[Mark T Jones]

I did sign a PG when opening the account way back when - so yes assuming they've not lost the paperwork a PG is in place.

A term loan wouldn't be a bad idea actually - you think that's more likely than them just pulling the O/D altogether?

They actually wrote to me over a month ago saying it was going to be looked at in the next 7 days and to call them if anything had changed. Called the call centre of relationship managers, let them know about recent challenges and new work wins... guy couldn't wait to get off the phone and seemed totally disinterested. Been half expecting a letter giving notice but nothing until the letter yesterday reminding me the review date is next week.

I'd have thought they'd give some notice if changing things - but very conscious it's a repayable on demand facility.

Obviously none of us know what they were going to say, but you might want to lead them down other routes (assuming you can speak to anyone who has any balls)

In terms of 'risk reporting', overdraft leaves them most exposed, loan less so and invoice finance is best of all - so these will always be softer - Additionally, talking to Ian about invoice finance might give you the power to tell them to stick their bank where the sun don't shine....

 

[TheoNe]

In my experience of dealing with Lloyds, there is a real chance that they will convert the overdraft into a 'business loan'. All you can do is know you facts, figures and if it comes to it, try and negotiate the rate on any loan offered.

 

[StefanChelt]

Thanks all for the thoughts.
As if by magic timing wise Monzo have just offered me a beta of one of their new business current accounts so I have a parachute account if they annoy me too much.

Assuming they do decide to end the overdraft facility - in reality does anyone know if business banks tend to do so without a notice period?

Obviously none of us know what they were going to say, but you might want to lead them down other routes (assuming you can speak to anyone who has any balls)

In terms of 'risk reporting', overdraft leaves them most exposed, loan less so and invoice finance is best of all - so these will always be softer - Additionally, talking to Ian about invoice finance might give you the power to tell them to stick their bank where the sun don't shine....

 

[StefanChelt]

Interesting.
In your experience do they wait right until the review date to do so? I'd have imagined there's some set-up time for any loan account...

In my experience of dealing with Lloyds, there is a real chance that they will convert the overdraft into a 'business loan'. All you can do is know you facts, figures and if it comes to it, try and negotiate the rate on any loan offered.

 

[Mark T Jones]

Why wait for them to tell you?

there might be loan options, or @Ian J can help with invoice finance

 

[JEREMY HAWKE]

Why wait for them to tell you?

there might be loan options, or @Ian J can help with invoice finance

I would be talking to @Ian J if I was in this position too unless you could trade away from the overdraft in a few weeks

 

[StefanChelt]

Typically enough made arrangements to sell some old equipment and cleared the overdraft just in case (a relief to be fair). Yesterday (the review date) came and went - no contact from Lloyds just a 'overdraft arrangement fee' charged this morning and a new review date next year.

On the plus side now the overdraft is cleared I can give notice and move to a cheaper to run account.

Thanks for the advice and suggestions on here.

 

[Paul Kelly ICHYB]

After 10 years, why not look at changing banks and see who will give you a better deal?