Directives have sent down by the government owned banks in particular, such as RBS & Lloyds etc whereby those banks are to being told to force commercial loan restructures on businesses, are creating havoc for weary business owners who are already struggling to make loan repayments and a profit. The commercial loan and property market is suffering much more than the residential market.
Our information is that banks have been told to retrieve physical cash for the vaults regardless of the consequences to business.
Many of the loans that banks are to force commercial loan restructures on are secured on businesses, commercial property and larger landlords with portfolios. Banks are finding any excuse to enforce the changes. New loans that are offered are with much higher rates and lower loan-to-value ratios, hence creating cash funds for the bank. The only alternative offered is repossession or liquidation. Business owners are incredulous of the practices now being employed.
Dubious Practices
Some of the banking practices being used by banks to regain funds are;
- Cancelling loans agreements without warning, or at the end of a fixed term.
- Banks force a commercial loan restructure to higher loan values and higher interest rates ( or both).
- Threatening repossession of assets or liquidation for non compliance.
- Forcing a shortening of the loan term.
- Attempting to appoint LPA receivers for non compliance.
Many of these practices are illegal and can be challenged by the business owner if it is not stipulated in the original contract that the changes can be made. Often, even if the contract states it, negotiations can still be entered into to challenge them legally.
Banks that loaned to property developers who built or renovated to sell on at completion in the hope of a swift profit when the sale was reached, have said they will not allow developers to rent the property to recover costs instead. Developers have been told to pay the loan back or face repossession. Properties are then sold on at auction for a fraction of the original value.
Business owners who have been approached by their banks in this way can be helped with our specialist team of negotiators who will intervene at chairman level to pay off the debt and restructure it with a new finance package. Please see this page for details or contact us directly.
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