Dealing with your Bank in times of crisis
Nothing kills a business faster than when a bank withdraws funding support.
If you are experiencing financial difficulties with your business bank, it is important that you enter into dialogue with them as soon as possible and seek a resolution.
Definition of Financial Difficulties
Under the SME Code a borrower must be classified as in financial difficulty where:
(a) The credit facility of a borrower is in arrears for three consecutive months;
(b) In the case of an overdraft credit facility, where the approved limit on the facility is exceeded by the borrower and remains exceeded for 90 consecutive days and there has been no engagement with the borrower.
Definition of Arrears
Arrears are deemed by the SME Code to arise where a borrower has not made a full repayment, or only makes a partial repayment on a credit facility, as per the terms of the credit facility, by the scheduled date.
When financial difficulties first arise on your account, the Bank should contact you in writing to advise of:
- The status of your account;
- The applicability of the SME Code;
- And the availability of their information booklet or Code.
The Bank MUST also offer you the option of an immediate review meeting to discuss your situation.
If you require assistance in dealing with your bank, ISME has a panel of experts to assist you. These are professionals who will bring you through the process and act on your behalf.
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