Ltd Co been asked by Barclays to take out a loan for half overdraft amount

[shas]

A friend of mine, with a 33% interest in a ltd co went to see their Barclays bank manager yesterday.

The manager was 'concerned' about the amount of bank charges on the account (there are thousands) & in a bid to reduce charges he suggested that the company...

reduce their overdraft by 50% by taking out a barclays loan to cover it because apparently charges are tiered & the higher the overdraft limit, the higher the cost of charges etc....


I was a bit suspicious when I heard this.....reducing liabilities (the overdraft) & increasing business for the bank (a new customer loan) sounds like a way for the manager to make it look like hes improving the banks business to me! I have asked about interest rates etc...the person doesnt know what theyll be!

does anybody have any opinions or advice or comments which they can share with me on this please?

[natweststaffmember]

Re: Ltd Co been asked by Barclays to take out a loan for half overdraft amount

There is an interesting article that I have literally just spotted:
SMEs hit by stealth bank charges

[shas]

Re: Ltd Co been asked by Barclays to take out a loan for half overdraft amount

Thanks will take a look!
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I thought it was suspicious! Im guessing that taking a loan out to please the bank manager is not the way to go...

[Tools]

Re: Ltd Co been asked by Barclays to take out a loan for half overdraft amount

They also need to be wary that the bank may want to secure the loan on property/assets of the business or Directors own property/assets. In simple terms, turning an "unsecured loan" into a "secured loan".

My personal opinion would be for your friend to take independent legal advice and take them the T&C's of any agreement before signing.

Also, as you state your friend has only a 33% share of the business, the other parties should also need to be in agreement to any action taken.

[shas]

Re: Ltd Co been asked by Barclays to take out a loan for half overdraft amount

Thanks Tools, I emailed the link that nwsm posted to 2 of the shareholders. I think that has, at least, made them stop to think about it a little bit more.