- Click here for a Support FAQ relating to Customer Payment Breaks
- Click here for a Support FAQ relating to Payment Services
- Click here for a Support FAQ relating to Vulnerable Customers
- Click here for a Support FAQ relating to Mortgages
How are banks supporting business customers?
The banking and finance industry is doing its utmost to deal with COVID -19 affected customers in an empathetic manner through this unprecedented and difficult time. Lenders are very conscious of the challenges that businesses are facing in dealing with their employees, suppliers, customers and delivery channels.
The retail banks (AIB, Bank of Ireland, KBC, Permanent tsb and Ulster Bank) have put in place measures to support their customers whose business is impacted. Various channels are available (Branch/Phone/Online) for businesses customers to apply for the support they require.
It is very important that businesses engage early with their finance provider to address cashflow issues which may impact on repayments on existing credit facilities, or result in the need for emergency/ additional working capital/trade finance facilities.
Businesses are generally looking for / requesting two types of support: a payment break, which tends to be the immediate priority; or they may have a requirement for emergency/additional working capital.
How does a Payment Break work for business customers?
A payment break for up to three months is available on existing borrowings. This will provide breathing space to business customers in respect of existing loan facilities and give them time to deal with urgent business continuity and staffing issues.
Payment breaks can take a number of forms depending on what best suits your business circumstances.
1. ‘Moratorium’ Payment Break – generally this means that your full loan repayment is postponed for an agreed period of time so you do not pay any capital or interest.
Ordinarily, at the end of this period, loans return to full capital and interest payments. At the end of the agreed period, either your future loan repayments will increase so that the loan is fully repaid within the original term of the loan or your lender may facilitate a term extension your loan which means that your repayments would remain the same, but over a longer period of time.
2. ‘Interest Only’ Payment – another option which may suit some businesses where they have the capacity to do so, would be to pay the interest as it arises during the payment break. You do not pay any capital which means that your repayments will reduce to cover just the interest. Your loan balance will not reduce during this period.
Ordinarily, at the end of this period, loans return to full capital and interest payments. At the end of the agreed period, your future loan repayments will increase so that the loan is fully repaid within the original term of the loan. However, your lender may facilitate a term extension your loan which means that your repayments would remain the same, but over a longer period of time, so therefore the cost of credit over the life of the loan will be higher.
Either way a payment break will give rise to a higher total cost of the loan.
Businesses needing to arrange a payment break should check their finance provider’s website – it may be possible to apply online or arrange it by phone.
A payment break can provide businesses with the space to start planning for the next few months, analysing current and expected cashflows, how costs and risks to the business can be mitigated and how best to deal with customers and suppliers.
Toward the end of a payment break finance providers will engage proactively with businesses to discuss and review whether the return to full repayments is possible or whether other repayment alternatives may need to be considered.
Am I eligible for a payment break if my existing loan is in arrears?
Lenders are committed to supporting all borrowers – including borrowers who are already financially distressed and have had their loan restructured. It is advisable to engage early with your lender to discuss what further relief measures can be put in place.
How do I apply for a payment break?
Lenders have established designated contact channels to receive applications and to process these as speedily and efficiently as possible. You should contact your lender through the designated channels which they have identified for this purpose – see under Helpful Links.
What type of questions am I likely to be asked and what information will I need to provide?
For customers who would have no need of a payment break other than due to COVID-19, finance providers are keeping the process simple and it may be possible to fill out an online form or to arrange it over the phone. You are likely to be asked the following types of questions:
- Is the reason for the request due to a COVID-19 impact?
- In what way will this impact on your business?
- What type of facility are you seeking and how will this meet the business needs over the duration of the payment break?
Will a repayment break affect my credit record?
A payment break of up to three months will not be reported to the Central Credit Register as a restructure event or as missed payments, so consequently will not adversely impact on your business’s credit record.
What type of credit facilities are available?
Banks and other finance providers are keenly aware that the cashflow of small and medium sized businesses (SMEs) may be adversely affected by the impact of COVID-19. They are committed to supporting viable businesses in continuing to trade while contingency plans are being implemented.
Banks are offering a range of credit facilities to help businesses deal with the impact of Covid-19. These variously include emergency working capital, short-term loans to address cashflow issues, supply chain supports, trade finance and foreign currency products.
Sector specialists, dedicated teams and contact points are on hand and you should contact your lender to find out what would work best for your business and your particular circumstances – see under Helpful Links.
What type of information will I need to provide?
In the case of COVID -19 affected businesses seeking emergency/additional Working Capital / Term Loan / Temporary Overdraft, there will be a need for some financial information to be provided, but the goal is to have processes that are as straightforward as possible. Finance providers are obliged to carry out a credit assessment which means they will need to gather relevant information. The type of information will very much depend on the level of the facility sought, the nature of the business and the sector in which it is operating.
Typically, the type of information sought may include the following:
- Application details for the credit facility requested
- A cash flow forecast setting out expected cash inflows and outflows
- Most recent financial/audited accounts available
- An up to date list of debtors and creditors
- A Statement of Affairs/Asset & Liability Statement
- Details of all debts held with other finance providers
- Tax clearance certificate/information or details of any agreed tax arrangements
It is important to be realistic when setting out expected cash inflows and outflows, recognising the challenge of operating in such an uncertain business environment. Given the level of uncertainty, it can be a good idea to work out your cashflow based on a few different scenarios such as a) a full return to business by a certain date, b) a partial return to business and c) your worst case scenario.
What will happen if I don’t have audited accounts for the financial year 2019?
The Registrar of Companies has decided that all annual returns due to be filed by companies between now and 30 June 2020 will be deemed to have been filed on time if all elements of the annual return are completed and filed by that date.
The situation will be kept under review and the date of 30 June may be extended depending on the situation at that time. Companies should check the CRO website www.cro.ie for more details.
It is still very much in your interests, however, to have available the most up-to-date financial information. So, where it is possible, if your accountant can finalise your accounts, it is advisable to try to get them completed. Even if still not signed off by your accountant, your 2019 financial accounts in draft form or management accounts could prove helpful.
What can I do to protect my business against fraud at this time?
Businesses have increasingly become the target of financial fraud or scams. Unfortunately, the current situation has given rise to yet more and new types of fraud which aim to take advantage of you and your business at this time of heightened vulnerability. Your best defence is to stay informed, alert and secure; and you can do that by regularly checking our specially-designated website for information and guidance.
Where can I find bank specific information on COVID-19 support for business?
- AIB – https://aib.ie/covid19/business
- Bank of Ireland – https://businessbanking.bankofireland.com/covid-19/supports-for-businesses/
- KBC – https://www.kbc.ie/news-and-press/latest-news-and-press-releases/covid-19-update-a-message-for-kbc-customers
- Permanent TSB – https://www.permanenttsb.ie/covid-19/
- Ulster Bank – https://digital.ulsterbank.ie/business/support/coronavirus.html
What other sources of finance are available?
In addition to the main banks, a number of alternative providers of finance are available. These firms provide a range of funding options for SMEs including invoice discounting/finance, leasing, hire purchase, export finance term loans, deferred loans, merchant cash advance etc.
What Government financial support is available?
A €200m Strategic Banking Corporation of Ireland (SBCI) Working Capital scheme is available to eligible businesses impacted by COVID-19. Loans of up to €1.5m will be available at reduced rates, with up to the first €500,000 unsecured. Applications for an eligibility code can be made through the SBCI website which you then provide to your finance provider who will process the loan application.
A €200m Package for Enterprise Supports including a Rescue and Restructuring Scheme is available through Enterprise Ireland for vulnerable but viable firms that need to restructure or transform their business.
A Finance in Focus grant of €7,200 will be available to Enterprise Ireland and Údarás na Gaeltachta clients who want to access consultancy support to undertake immediate finance reviews.
Local Enterprise Offices
Local Enterprise Offices provide service supports for small businesses. A new Business Continuity Voucher worth up to €2,500 is available to businesses to assist in preparing short-term and long-term strategies issues to respond to the COVID-19 pandemic.
The maximum loan available from MicroFinance Ireland has been increased from €25,000 to €50,000 as an immediate measure to specifically deal with exceptional circumstances that micro-enterprises – (sole traders and firms with up to nine employees) – are facing. Applications can be made through the MFI website or through your local LEO.
Will Revenue still expect all PAYE/VAT to be paid on the due dates?
To assist businesses (SMEs) the Revenue Commissioners has suspended the application of interest on businesses late payments of VAT for the Jan-Feb 2020 return and late payments of employers PAYE liabilities for Feb-Mar 2020.
Revenue emphasises that it has a long history of working with taxpayers to work out a resolution for their tax payment issues and the following practical steps are recommended:
– Revenue still want SMEs to complete their returns on time.
– Early engagement with Revenue is strongly recommended if you are running into difficulty
Businesses can click here to apply for a Phased Payment Arrangement using Revenue’s Online Phased Payment Facility which is available 24/7.
Current tax clearance status will remain in place for businesses over the coming months. Revenue has also suspended debt enforcement activity until further notice.
What support is available to help pay my employees?
The Temporary COVID-19 Wage Subsidy Scheme will be operated by Revenue and enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer. The scheme is expected to last 12 weeks from 26 March 2020.
The COVID-19 Pandemic Unemployment Payment will be in place for the duration of the crisis. A payment of €350 per week is available from 24th March 2020 to all employees and the self-employed who have lost their job due to the COVID-19 (Coronavirus) pandemic.
Short Time Work Support – This is a form of income support for where employees have been temporarily placed on a shorter working week. Jobseekers benefit that Firms that need to reduce hours or days worked can avail of the DEASP Short Term Work Support by contacting their local Intreo Office, see Short Time Work Support