Firms fail after owners claim they were misled about the Enterprise Finance Guarantee
Clive May spent 30 years building up his bricklaying business, but when
it had a turnover of £2.6 million he was advised by his bank to take on
an Enterprise Finance Guarantee loan and his business failed
Mr May eventually was released from his EFG liability without explanation. He is now engaged in a legal battle for compensation; he believes that his business failed because the £70,000 overdraft was rapidly ratcheted down.
“If we hadn’t lost our overdraft on the back of a mis-sold loan, we’d still be trading. I left school with no qualifications and built a company that had a cracking reputation. To go from that to telling people you’re going under, the emotional toll has been huge,” he says.
The business department told The Times that it would ask the state British Business Bank, which runs the scheme, to conduct a full audit of Mr May’s case. It is understood to be concerned about RBS’s conduct over this loan, although it believes the vast majority of EFG loans have been sold correctly.
It is also looking into how lenders are recovering money when customers default on EFG debts after The Times supplied documents suggesting that Lloyds benefited from both repayment by the business owner and the taxpayer. Lloyds is claiming the entire outstanding EFG debt from a failed small Devon-based community farm business, even after it received 75 per cent of the outstanding amount from the government and charged the small business further fees plus interest.
Lloyds says that it will pay the government back as it receives funds from the customer, but a business department source said that it is “wholly inappropriate” for banks to charge interest to customers in default on any funds that have been repaid by the taxpayer.
Lloyds says that it will “amend interest charges to reflect the amount outstanding and the reducing sum held under the claim on the guarantee”.
ADMIN: RABF comes across time after time the likes of Lloyds Commercial Finance, RBS and Barclays that pile on charge after charge forcing a viable company into insolvency!
Mr May eventually was released from his EFG liability without explanation. He is now engaged in a legal battle for compensation; he believes that his business failed because the £70,000 overdraft was rapidly ratcheted down.
“If we hadn’t lost our overdraft on the back of a mis-sold loan, we’d still be trading. I left school with no qualifications and built a company that had a cracking reputation. To go from that to telling people you’re going under, the emotional toll has been huge,” he says.
The business department told The Times that it would ask the state British Business Bank, which runs the scheme, to conduct a full audit of Mr May’s case. It is understood to be concerned about RBS’s conduct over this loan, although it believes the vast majority of EFG loans have been sold correctly.
It is also looking into how lenders are recovering money when customers default on EFG debts after The Times supplied documents suggesting that Lloyds benefited from both repayment by the business owner and the taxpayer. Lloyds is claiming the entire outstanding EFG debt from a failed small Devon-based community farm business, even after it received 75 per cent of the outstanding amount from the government and charged the small business further fees plus interest.
Lloyds says that it will pay the government back as it receives funds from the customer, but a business department source said that it is “wholly inappropriate” for banks to charge interest to customers in default on any funds that have been repaid by the taxpayer.
Lloyds says that it will “amend interest charges to reflect the amount outstanding and the reducing sum held under the claim on the guarantee”.
ADMIN: RABF comes across time after time the likes of Lloyds Commercial Finance, RBS and Barclays that pile on charge after charge forcing a viable company into insolvency!
Please read the full article or email archive@rabf.org.uk from the link below
http://www.thetimes.co.uk/tto/business/goingforgrowth/article4178985.ece
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