Wednesday, 29 October 2008

Bank Interest

Credit crunch or not I need a loan to start this business. I have been liberally using the banks' information as a basis for my business plan and cash flow forecast, and now it was time to go into battle.

I had heard that RBS was a good friend for start-ups and take an interest in helping women entrepreneurs and prior to this latest financial debacle they appeared sound. Alas the nearest appropriate branch is over a hundred miles away so on with the quest.

Quickly I narrowed it down to HSBC and Barclays. I have banked with Barclays since before I could say ethics (thanks Mum) and HSBC came recommended by many included my technical guru. Then I thought that I should pursue the ethical angle and contacted the Co-op. So with three in mind I started my inquisition.

Fortunately I contacted Co-op first as they proved an interesting bench mark and it was the start of another circuitous journey. Interest rates on a business loan would be 10.33% with an arrangement fee of £100. This sounded quite impressive, but it had strings attached - I could only get a loan if I had an account for over a year unless I joined the FSB. F S Who? Federation of Small Business, an organisation who thus far had escaped my radar. Membership of the FSB would be in the region of £150, but they could not confirm nor deny that until I met with a representative. They were darned evasive they required a face to face meeting to give me any real information. So, on with the quest.

HSBC had the telephone manner of a prison warder with tooth ache and thought that, if I was incredibly fortunate and clever, they would offer me a loan at 16% interest. However, both directors must sign away their lives for the privilege and that would cost an additional £160 to arrange. Onwards, there must be something better than that.

Barclays were keen to meet so I arranged to visit the manager of my local branch. They very much sell the expertise of their business managers as a bonus for banking with them, so I put on a shining suit of armour to do battle and prove my credentials. Poor guy, when you are pushing retirement it must be difficult to suggest gravitas wearing the corporate teal polyester tie and shiny black striped shirt. Nevertheless I attacked with gusto, and being a local branch in an undynamic area, I may have over-pitched. Suffice to say, I had the upper hand and he was determined to match if not improve on the C0-op's terms; I was being begged for my custom but he had to appeal to his boss / the central computer for decent loan terms for me. Sadly this coincided with Barclay's darkest liquidity day and he came back with an offer of 20% plus arrangement fees.

Back to the Co-op and the shady world of the FSB. I am delighted with the results! The FSB has enabled me to shortcut an array of difficulties. It did cost £150 to join but I get free banking for life with the Co-op so the subs should be covered with that alone. I also get a legal helpline that I have since used twice, and a range of other discounts. The best one is help with Internet payment, via Streamline. For many companies you need to be established a year to be able to take on-line payments but none of those hurdles apply and they have the lowest rates around.

If you have been reading all these posts you can see that the need for the loan is real, £100 here, £150 there and so far nothing real to show for it - but I am getting there. I am proud to be banking with the Co-op that is all set up, with Internet payment capacity and loan pending - but with only 10.33% interest and lovely friendly people things are looking rosy.

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