Four thousand eight hundred and forty four dollars.
This is how much money we received for selling our land this week. I thought if I wrote it out in full it might feel more substantial but it doesn’t. The real estate agent got $6k for selling it - he made more than us. This once trivial number now represents the brutal reality of what borrowing money as a small business actually costs.
2 years ago, HUCX borrowed $75k from a private lender. At the time we had multiple projects about to kick off and we needed to get some raw materials and cover rent and wages in the meantime. We’d had no luck borrowing money from a bank so our only option was to borrow from a private lender. At the time, I can say ‘hand on my heart’ that we thought that paying back the loan, along with the interest of $1,500 a month wouldn’t be a problem. We’re finally getting a steady stream of work and the product has never been better.
Within a few months, one of those projects was cancelled because the owner decided not to go ahead with the build. Another had to delay kick off because they were an owner builder and something else had temporarily shifted their finances. The scale of the project that we did start was drastically reduced when the owner split the project into two smaller projects rather than one large one.
There are SO MANY red flags that are screaming at me while reflecting on this time but honestly we felt like we were there. We had jobs lined up, the prefab system was so fricken awesome - strong, light and the insulation was literally through the roof. We weren’t even aware that the CBA would start approving home loans for prefab buildings just a few months later. This would’ve kicked off another 6 more projects at least.
Spoiler alert: We didn’t make it.
12 months after we borrowed the money we went into administration. We had paid close to $18k off on interest but hadn’t touched the loan. This is where it gets sad. Because we didn’t have any money at the time we had to put up our land as security. We had a tiny bit of land that we were going to build our house on that we only owed about $60k on. At the time I was FURIOUS with Matt but we had already worked so hard to bring the business to life that it was just another gamble we needed to take. We were so close.
When we first closed, administrators came in and sold everything. I am not sure what they total was. Honestly, I didn’t want to know because it was putting a price on the last ten years of sacrifice. We also don’t know - we're still in administration 12 months later. The private lender took the majority of proceeds from the fire sale. We understand it was about $35K. We put the land up for sale immediately. We had called it quits when we did because there was enough equity in the land to cover our outstanding debt on the loan, along with a whooping overdraft, a maxed out credit card and a substantial personal loan.
Our land had been on the market for 10 months and finally sold a month ago. We’d wanted $220k, which was the value estimated on our council rates but as time marched on, the loan company was getting more and more persistent so we had to sell the land for what we could get - $160k. Matt has maintained regular and cordial communications with the lenders throughout this whole time. Since they had already been paid back a big chunk, we were under the impression that we’re not going to charge us interest (Matt had discussed this over the phone) so we assumed they’d just take the remaining $35k from the sale of the land.
Fast forward to this week when everything settled with the sale. The private lender took $80k. They had decided to charge us the maximum amount they could and because they had the land as security, we didn’t even know how much they were going to charge us, the lawyer just paid their bill. We still haven’t seen an invoice from the lender and they have so far been uncontactable. The first we knew about this was when the $4844 hit our bank account. Taking our mortgage into consideration, the $6k for the real estate agent, $1.2k for the lawyer and the $1k we owed on rates and water were expecting at least $80k. Even though we sold the land for $60k less than we wanted, it would still be enough to get us back to zero.
$4844 doesn’t get us back to zero. Leaves us with $70k debt and no means to pay it back. We had put all our debts on hold under the proviso that we'd pay them back with the sale of the land. Discovering that the lender took $80k is absolutely heartbreaking. The fact that we had no say in it at all is beyond disappointing. Matt is obviously seeing if there is anything we can do but we have nothing in writing that says they weren’t going to charge us interest so it is their word against ours. I can’t imagine them giving us the money (that they already have) back out of the goodness of their hearts.
The 19th of October is 12 months since we closed HUCX. We’d hoped to have everyone paid back and be able to start fresh with whatever the next stage of life entails. We’ve given so much already and to discover that there is still $70k to go is really hard to reconcile, even for me who is the queen of finding the silver lining.
Disappointed. Disillusioned. Deceived.
I feel deceived by the lenders and even by our own confidence that we had this under control. There is no point complaining about it now, we just need to continue and chip away at the debt but I wanted to share this story as a warning to any small business. If you have to borrow money, don’t use private lenders. In hindsight we probably should’ve called it when the bank said no. Surprisingly, Banks are far more forgiving, good to negotiate with and have stopped charging us interest. Private lenders won’t stop until there is absolutely nothing left.
