We can't bank on our lender, says business backed by £10k grant
A young start-up with a bright future ahead of it, has claimed it has been twice let down by lender HSBC, despite the business attracting £15,000 in investment funding.
With £11,000 in advance bookings already behind it for the forthcoming holiday season, the Cornwall Camper Company has accused the lender – which describes itself as the world's local bank – of a 'computer says no' philosophy.
Launched in December by chief executive Ben Ford and partner Jess Ratty, the holiday-hire venture has already attracted national press coverage. It has restored two classic VW Bay Windows, with Mr Ford currently in the process of renovating and customising a third.
But he says that since October, HSBC has turned down two separate applications to make working capital available to CCC, which he says would be repaid "within weeks."
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This week, HSBC launched a media campaign to highlight how it provided more than £1.1 billion in gross new lending to South West SMEs during 2012. Among them was CCC, which opened a business account with it in February last year. The lender provided a £3,000 small business loan and £2,500 overdraft facility.
"In the beginning, they were eager to capture us into its realm of business loans," said Mr Ford, who has been working full-time and unpaid on the start-up, supported by Ms Ratty's income as a marketing executive.
He says in October, the business applied to HSBC for an overdraft extension – to offset working overheads until the holiday season begins in April – but was turned down by the bank
Mr Ford said: "We were advised by our local bank that if we really could not pay our bills then perhaps we should consider bankruptcy."
Keeping the business ticking over by cutting down on their household expenses, CCC secured a £10,000 business growth grant from the Clay Country Local Action Business Grant Scheme in December.
The grant was awarded to fund the acquisition of two additional vans to meet anticipated demand and to create a salaried job for one person by September 2014. The funding scheme pays out by reimbursing the start up's investments in stages, rather than upfront.
In January, the South West Investment Group agreed to support the business with a £5,000 start-up loan from investor James Caan's new finance initiative for young entrepreneurs.
This has covered some of the company's day-to-day costs and also to complete jobs which have unlocked cash from the CCLAG grant.
The start-up is currently working to complete a third camper-van in time for April and applied to HSBC for a £2,500 overdraft extension again, earlier this month. Despite its costs set to be reimbursed through the CCLAG grant within weeks, the start-up said it was yet again turned down by the bank.
Mr Ford said that while HSBC staff at local level could see the business's potential, he believes the company's requests had been passed up the line where it had been met by a "computer says no" refusal.
He said: "We may be small but we have the support to back us up, except from our bank.
"We currently have £11,000 worth of bookings for the year, a £10,000 grant behind us and healthy activity on our bank account – but HSBC are still refusing us, with no option to appeal.
"£2,500 is small change to the bank. We have carefully thought about our expansion, have a business plan, a mentor and financial forecasts. HSBC knows this – so what more can we do?
"We will be successful and won't be beaten by a computer in a building in London."
In a statement, HSBC said: "We do not comment on individual cases but we're keen to provide financial support to businesses by lending to them responsibly, with each lending application considered on its individual merits. Where a company has made an unsuccessful lending application we encourage them to utilise our independently audited lending appeals process."