The Zombie Debt Crisis

Somebody from one of the big invoice finance companies said something on a call last week that stuck with me. He used the phrase “debt stacking,” and he wasn’t using it as a compliment.

I had a professional practice come to me in exactly that position. Multiple short-term loans, stacked one on top of another, costing them £76,000 a month just to service the debt, not to grow the business, just to keep servicing what they’d already borrowed. We restructured it properly, arranged the right finance instead, and got that same monthly cost down to around £12,000. Same business, same underlying debt. One difference, someone looked at the whole picture before adding to it, not after.

Here’s how it creeps up. With open banking, every lender can see exactly what else you’re carrying, nothing’s hidden. But every time you go back for another short-term loan, you get moved into a higher risk band. Once you’re there, you’re not dealing with the better lenders anymore, you’re dealing with the ones who specialise in poor credit, at a price to match. That’s how £76,000 a month happens, without anyone deciding, at any single point, to let it get that bad.

There’s a cheaper way to sit outside all of this, and it’s usually more finance done properly, not less, structured around what you’re actually owed rather than another short-term loan stacked on the last one.

So before you take any short-term loan, give me a call before you expose yourself, and your family, to another personal guarantee. Let me show you the real options first. Because every one of those loans has your name on it, and everyone round your kitchen table attached to it too.

Wouldn’t you prefer a limited guarantee rather than a full personal guarantee? Then speak to me before signing a personal guarantee and keep your family safe. I’m Mark Smillie. Why not call me now on my mobile?