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Originally Posted by Remington Raidr
So you got the gubmint to compel the banks to give you a loan. Good for you. More than a few people did that stateside, and, well, there were some . . . problems. Enquiring minds want to know, strictly business-wise, how did you muzzle, de-fang, or otherwise tame the wicked witch of down under? I'm not seeing it here, and SHE seemed like a BIG part of the problem. Specifically did you have your OWN (not your company's or your brother's) attorney? How did you resolve the chunk of change she has already taken? Just askin'.  |
To be honest, I learned a hell of a lot from A-Z on how banks look upon loan applications and trade facilities in the space of 6 months and that helped; getting sound advice from a banker who is a friend and can explain to you why applications keep getting rejected does help because banks just usually can't be bothered to explain why.
1) We had a negative share capital and were technically insolvent (bankrupt).
2) We had existing loans to the business which were relatively short term (15 years) with re-payments taking a toll on the business each month due to the heavy commitments.
3) High running costs which was reflected in the P+L Statement and Balance sheets as well as inventory being low due to a lack of trade facilities (which we were trying to get in the first place to allow us to purchase inventory and to allow us to repay the bills for these inventories 120 days later).
4) It was obvious to the banks the company was being run into the ground with poor management decisions and 3 years of back to back losses that took the company into losses exceeding 800k AUD.
It actually took 2 years of audited accounts that showed a profit and the company injecting more cash back into the company to take us out of insolvency and moving some properties into the company as well as a detailed explanation WHY we got into trouble in the first place and what changes we had made as well as what our future plans were as far as a point by point turn around plan including increasing our inventory but improving turnover of inventory in a reasonable period of time that helped.
We were LUCKY. Very very lucky. Our audited accounts for 2007-2008 took forever to get done so we never got to show the actual accounts to the bank but a draft copy. By the time I realized why our applications were getting rejected with a little bit of help from the feds who hinted that "if i got the company out of negative share capital, it would make a HUGE difference between getting what we asked for as far as trade bills were concerned" it put me on the right track.
I had sacked our previous auditors, hired a new one who was highly recommended by the feds, got the 2007-2008 and 2008-2009 audited accounts sorted out by showing consistent improvements in the turnover of sales, lower running costs and increased inventory (we ordered more inventory which helped increase sales but negotiated for longer repayment plans for a short period of time) and then pumped in cash from golf memberships which were sold and disposal of my and my bro's personal cars with the cash being used as working capital for the company and taking pay cuts as directors.
We also requested for the loans to be extended into longer term loans with lower repayments per month and that was also approved.
It does help to understand why as I said banks say NO because as I said, most of the time, they don't bother telling why so if you can get an answer from them as to what specifically was the reason you didn't get the loans or facilities you asked for, you at least can sort the problems out and then go back to them with a better chance of getting perhaps what you need...or getting some of what you need..
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