16 April 2020 - When talking to your bank about lending options, it's important to be prepared for the questions they may ask.
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;
- Staffing problems;
- Decline in demand because your customers are also impacted;
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:
- Short-time working / Emergency Employment Bridging Fund (NOW);
- Tax deferral;
- Supplier credit;
- Agreements with lessors or utility companies;
- Inject private financing;
3. It is important to provide your recent financial statements, and both short-and longer-term forecasts. This can be done by:
- Anticipated cash headroom/shortfall under different sensitised scenarios;
- Ability to repay any deferred liabilities or additional debt injected to the business;
- Longer-term business recovery;
Following the extensive package of the Dutch government, the largest Dutch banks are now jointly introducing measures which offer their SME clients extra breathing space. Postponements of repayment ensures that smaller companies which are fundamentally healthy, can receive a six-month extension of repayment on their current loans. Other important financing arrangements include an extension of the Enterprise Financing Guarantee (GO) and SME Credit Guarantee (BMKB). In fact, this opens up wider financing options for both SMEs and large companies.
Mazars can support you with:
If you would like assistance Mazars Corporate Finance advisers can support and help you with:
- Drawing up a continuity plan including scenario analyses in preparation and support for a financing application or entitlement to one of the measures;
- Analysing your historical financial data and prospects to determine your financing needs and opportunities;
- Support in preparing for and conducting discussions with your bank;
Want to know more?
If you require more information, please contact Aron de Jong by e-mail or by phone +31 (0)88 277 18 00 or Joost Reefhuis by e-mail or by phone +31 (0)88 277 17 68. They will be happy to help you.