Some will, some won't
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I READ with interest Brian Chalmers-Hunts article "'Lease of life in credit squeeze"' (CM June 22).
I have been driving for a friend who was an owner-driver.
Three months ago he decided he had had enough of going up the road and owning a lorry and wanted to do something different and be with his family more. He asked me if I would like to buy the business from him for £16,500.
The business consists of a 1976 Magirus-Deutz 232 D16 sleeper-cab unit, a Crane Frue hauf 33ft refrigerated trailer, a 1000-gallon diesel tank with electric pump, spare wheels, tyres, tools, etc, with regular work from three or four companies.
From GM's article I quote: "Most buyers usually ask the bank for money."
I've asked all the major banks, including Williams and
Glynn and another smaller merchant bank. They all said they were not interested in lorry businesses. My bank, National Westminster, said: -The business is not good enough and anyway we do not buy business for someone else to run for us.''
Another CM quote: "Those who prefer not to buy outright via a bank loan can use HP, leasing or contract hire.'
Again, IVe tried all three of them. Nobody will lease second-hand vehicles. No HP company wants to know unless I can put down between £5000 and £8000. I've tried six HP firms and three lease companies.
Quote: "The help he got from Crane Fruehauf advisers enab led him to launch his own business with virtually no capital, and get him to the financially strong position that he enjoys today.'" I asked CF for a loan as I was buying a CF reefer trailer. I was told they only lend if I buy through one of their dealers. Maybe you can tell me why firms will lend for a completely new business with no contracts or anything, but not for a rolling business.
The business I wish to buy is at present being run by a man who is fed up with going away. He does one trip a week and is home by Wednesday evening, or at least the latest Thursday morning.
It is turning over about £25,000 per year, nearly £500 per week. His actual lorry expenses total £12,700 per year, nearly £250 per week.
I did manage to get a firm to tell me how much it would cost if they were to lend me the money, and they said between £400 and £500 per month, over five years. This works out to £30,000 on the present turnover, bearing in mind that I have no ties, so I would do two trips a week or at least another upwards trip; over five years this is £125,000. Surely this should be ample to cover the £30,000 or even £40,000?
All HP firms and banks ask for security. My parents have a business in a very busy North Cornish holiday town. It is worth £49,000, with turnover of £51,000 per year, yet when you offer this as security they still do not want to know.
Please could you tell me why, or better still, put me in touch with someone who will lend me the money? I could raise £3000 to £4000 if necessary.
D. C. BROWN, Launceston, Cornwall
Banks and finance houses do not like lending without what they consider adequate security and normally won't look at third-party agreement; two finance houses would not tell us what are the special circumstances for third party agreements in which they will lend — only that "every case is considered on its merits". Hire purchase companies prefer new units, which carry a manufacturer 's warranty as security, and you presumably have no secure haulage contracts. I think too, you would need to show that you have insurance provision to cover sickness or accident_ One leading finance house advises that you consider hire purchase or lease of a new unit so that vehicle repairs will be kept to a minimum. But I would advise you first to consult a local business transfer agent — see the Post Office Directory Yellow Pages. — Editor.