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In 2003 I started a ltd company in construction, things went ok for a few years until 2006 when the recession started, then work almost dried up. The company had by 2007 a loan and overdraft with lloydstsb of approx. £70,000. This was causing problems with corporation tax on the directors loan account. I had not been frivolous or drawn too much from the business, hardly anything from 2006/2007. I went to the bank who said that one way to avoid this was to inject cash into the business therefore reducing the balance on the directors loan account. The suggestion was that I borrow enough to clear the existing debt, effectively gifting the money to the business.
Things were desperate and at the time no-one knew how much longer the recession would last so I agreed.
But the bank would not lend to me personally so what they did was to open a new business account in my name and lend by way of a business loan.
The ramifications of this have proved serious. The Ltd Company struggled on until 2013 when it was wound up for a comparatively small debt. I still have the business loan and will not pay it off for another 9 years.
Sometimes when you are desperate you do the wrong thing but I have been looking back at the documentation and now realise that the way the bank did things was wrong and could be considered fraudulent but at the time they had me over a barrel.
For a start I should not have been able to have a new business account when there was no actual business relating to it, this new "business" never had an income or expenses other than the loan repayments and the monthly service charge. The agreement was filled in by the bank and states that there was a business and that was in my name. The agreement itself was only intended for businesses either LT or sole trader etc. At the same time I was compelled to take out business loan protection insurance and that again was filled in by the bank, the insurance has long since been refunded so not an issue. The form for the blri states that I was actively engaged in working for the business. This was all untrue, there was no business, and done at the behest of the bank as the only way that they could lend the money. I have to say at this point that the manager knew full well that there was no business, it was his suggestion to do it this way, at all times the bank were aware of my circumstances and my personal financial situation which was pretty dire. It was treated as a new business but with no income or business plan or books or anything. There was no attempt made to discern whether I could afford to pay back the loan, no checks, nothing.
I do not know whether the actual agreement could be seen as fraudulent even if it is suspect but the blri form involves a third party insurance company and I had signed a false declaration.
It seems to me that the bank were so keen to sell me the new business loan and especially the blri that they used this invented business purely as a device to do so.
I know things were different then and would hope that the banks do not behave like this now but I have serious doubts over the validity of the loan agreement, it is just a pack of lies. I have complained but to date not got far, the response was basically that they did me a favour by lending the money at all.
With hindsight it would have been better had they refused any borrowing at that time, the Ltd Company would have failed earlier than it did.
Things were desperate and at the time no-one knew how much longer the recession would last so I agreed.
But the bank would not lend to me personally so what they did was to open a new business account in my name and lend by way of a business loan.
The ramifications of this have proved serious. The Ltd Company struggled on until 2013 when it was wound up for a comparatively small debt. I still have the business loan and will not pay it off for another 9 years.
Sometimes when you are desperate you do the wrong thing but I have been looking back at the documentation and now realise that the way the bank did things was wrong and could be considered fraudulent but at the time they had me over a barrel.
For a start I should not have been able to have a new business account when there was no actual business relating to it, this new "business" never had an income or expenses other than the loan repayments and the monthly service charge. The agreement was filled in by the bank and states that there was a business and that was in my name. The agreement itself was only intended for businesses either LT or sole trader etc. At the same time I was compelled to take out business loan protection insurance and that again was filled in by the bank, the insurance has long since been refunded so not an issue. The form for the blri states that I was actively engaged in working for the business. This was all untrue, there was no business, and done at the behest of the bank as the only way that they could lend the money. I have to say at this point that the manager knew full well that there was no business, it was his suggestion to do it this way, at all times the bank were aware of my circumstances and my personal financial situation which was pretty dire. It was treated as a new business but with no income or business plan or books or anything. There was no attempt made to discern whether I could afford to pay back the loan, no checks, nothing.
I do not know whether the actual agreement could be seen as fraudulent even if it is suspect but the blri form involves a third party insurance company and I had signed a false declaration.
It seems to me that the bank were so keen to sell me the new business loan and especially the blri that they used this invented business purely as a device to do so.
I know things were different then and would hope that the banks do not behave like this now but I have serious doubts over the validity of the loan agreement, it is just a pack of lies. I have complained but to date not got far, the response was basically that they did me a favour by lending the money at all.
With hindsight it would have been better had they refused any borrowing at that time, the Ltd Company would have failed earlier than it did.
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