My history of banking with RBS started in the mid 1990s when I finally got sick of the mess Lloyds were making of simple things, like supplying cheque books and statements. RBS (prior to their buying Natwest) were supposedly a bit different, especially for Guildford (hundreds of miles South of Scotland - non-Brits might be wondering). So my previous company started trading, at a loss of course for several years while we found our feet and our customers found us. I build companies who sell something called Software As A Service (SAAS). It used to be known as an ISP (Internet Service Provider) and today it is starting to be known as a Cloud Solution provider. But basically we don't sell software, we provide services over the internet (and other types of telecom) that companies (usually) pay for through subscription charges (typically). But the basic point is that my companies have most of their cost up front to build the stuff we eventually sell (hopefully), and that can take many years - especially if it's complicated. All of this is easily understood by people in my industry, but completely and totally misunderstood by banks. They've never understood the way money works in an SAAS business.
So I built my last company with £0 help from RBS. I did ask for help. Many times, especially when we were sweating on cheques arriving, but they always refused because our 'books' showed us to be loss making. Well after about 10 years of struggling to fund the business from sales and sweat, I sold it in 2006 for many £millions. Clever me. Not a penny was ever borrowed. Thanks RBS for making it so fucking hard. Well I did it, and anyone with half a brain ought to be able to work out that I stand a better than even chance of being able to do it again.
So before I sold my last business, I engineered a corner of it, which I didn't sell, to be my next venture. 10ACT (pronounced tenacity) is growing steadily. We have several major car manufacturers as our clients together with large dealer groups and many other types of businesses. It's still an SAAS, so it needs lots of investment up-front before it starts making a profit. Fortunately it no longer needs any of my cash since it is, as we say, finally cashflow-positive, but the basic point is that its books currently look weak (in comparison to traditional types of businesses). And like most businesses with fluctuating revenues and small reserves, there are months when anticipated cheques don't arrive on time. To cover these eventualities, most businesses use overdrafts. So I asked RBS to arrange one for us. We only asked for £24k (the signing limit for our Relationship Manager), which I agreed to personally guarantee (knowing they wouldn't understand a word about the business and would reject taking a risk on lending it anything without such a guarantee - just like my last company).
So far, so good(ish). I signed all the forms (although at the last minute they demanded my wife, who's also a director, also had to be there to sign... why?). And they told me it would cost the company around £400 a year just for the facility (whether we used it at a high interest rate - ie profit to the bank - or not... why? What does it cost them every year? Another bank ripoff). Anyway, to the point of this blog. Yesterday, when the facility was meant to have been put in place, I got a call from my Relationship Manager's boss. Basically he told me that my personal guarantee wasn't good enough! It's £24,000! I bank personally with Coutts, a division of RBS. They know how much I'm worth. The forms I signed said they could come gunning for me (and/or my wife) if my company doesn't pay back the overdraft should the bank call in the loan (if we ever use it, that is). I told him that this was both stupid and insulting, and he said that RBS couldn't guarantee that I would always have sufficient funds to pay the guarantee.
Technically they are of course correct. I could liquidate everything I own and put it all on a horse. Is that likely? Isn't it worth the risk in order to make me and my company happy customers? How likely would it really be for me to go completely bust (remembering that the last £24k is theirs). Basically what RBS have said to me is this:
"We don't trust you and we don't think your company has any chance of succeeding.
Well sod you RBS. I've had enough (there's lots of other silly bits and pieces that have pissed me off about them over the years as well - like their totally rubbish online banking. They want to charge me to upgrade it to their 'Business' online service where all their competitors (including Coutts) provide the sorts of things we need, for 'free'.) We're finally going to change banks. Some of my mates tell me Barclays are worth talking to. Maybe HSBC. To be honest, they're probably all as bad as each other, but we're off, and I've had my rant now.