Covid-19: The Questions your bank will be asking

At this time, lenders, understandably, will be working through a high volume of requests. So, preparation is key to ensuring your relationship manager can process yours efficiently, and that you receive the funding required.

We've listed below some areas to consider when preparing for discussions:

1. Explain how your business and cash flows have been impacted; providing examples such as:

• Loss of income from a forced closure due to social distancing
• Customers taking longer to pay
• Supply chain restrictions
• Usual customers are also impacted so have reduced or no demand

2.  Your bank will want to see what you have been doing to mitigate risks, and what steps you are taking to ease short term liquidity. This could include:

• Time to Pay arrangements 
• VAT deferral 
• Coronavirus Job Retention Scheme 

3.  It is important to provide your recent financial statements, and both short-and longer-term forecasts to highlight:

• Anticipated cash headroom/shortfall under different sensitised scenarios
• Longer-term business recovery and ability to repay any deferred liabilities or additional debt injected to the business

Banks have been asked by the government to support those businesses that were viable pre and are expected to be viable post-Covid-19. In many instances, they are willing to increase existing facilities or offer capital repayment holidays for several months.

The two main schemes introduced are:

• Covid-19 Business Interruption Loan Scheme ("CBILS") and Covid-19 Corporate Financing Facility Scheme ("CCFFS") 

These schemes are processed through British Business Bank accredited lenders, a list of these can be found here. It is worth noting that the level and structure of any lend is at the discretion of the funder.

With increased levels of debt, it is important to consider the impact on your future cash flows and ability to repay, along with continual consideration of the long-term success of your business.

We are here to help:

If you would like assistance around your ability to raise additional funds or would like support when dealing with your bank, please contact your usual Mazars contact or complete the form below.

We can help with:

• An initial appraisal of your recent historical trading and current forecasts/ability to raise additional finance for headroom.
• Supporting you with the preparation for discussions with your lender (including short- and longer-term forecasts and impact on the business)
• Lender negotiations and progressing a transaction through to completion, including:
  • Increasing current facilities
  • Relaxing current covenants
  • Negotiating capital and interest repayment holidays
  • New financing, including the government support loans where applicable
  • Longer-term financing support post-Covid-19

Get in touch

If you require further assistance, please don't hesitate to get in touch:

Contact us today