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LETS GET DOWN TO BUSINESS.

Question :
Hi, my business is over 9 years old and due to lock down it lost hundreds of thousands in cancelled sales and income. We had recently changed our business model & services which had been working. Last year we were the situation where a director had a personal default listed against them. This has been paid in full but at the time as a result the bank unknown to us put the business on a credit watch. As a result they took 5 weeks to let us know that they would not even assess a loan application for the business. After advice a complaint was laid and as a result they have given a loan application but have stated they still expect to decline any application. Without a loan we will be unable to pay our accounts that were due during lockdown & be unable to get any more parts to complete work that is booked which will cease our business. How can we make our best case for a loan application and what other options are open to us? I’m a mother of 4 young children & with the business being the only source of income I’m terrified for my family

Question submitted 15/05/20 @ 06:20am
Industry: Funding & Finance
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  • Good morning, sorry to hear of your predicament. Firstly, have you applied for the governments small business cashflow loan? Depending on the size of your business and need, that could provide some immediate access to cash while you deal with the funding of your business longer term. My next suggestion is to speak to your suppliers. If you have a long term relationship with them and some confirmed work ahead, they should recognise that post-lockdown, they will have a viable customer and so be prepared to show some flexibility with your account. My third suggestion is to engage your accountant to help with your loan application if you already haven’t already to 1. Help prepare the business case for the bank 2) evaluate any nonbank lending options in the market. There are providers in the market who consider short (or longer) term business lending

    Hi there,
    The only thing that I would add to this is the importance of regular conversations with your bank regarding your intent, any risks or considerations and your opportunities. I talk to the bank at least once a month. The benefit has been considerable.
    I would also look to ensure that you have a high functioning board. The boards role is clear and this situation should have been raised ahead of its realisation. A great board really makes a difference.
    Adam

    Hi, Great comments from Ross.

    There are a number of non-bank business lenders in New Zealand that may be able to help as an alternative but it’s important to note that their interest rates are also likely to be higher.

    Take a look at the IRD small business cashflow loan in the first instance https://www.ird.govt.nz/covid-19/business-and-organisations/small-business-cash-flow-loan

    Echoing Ross do speak to your suppliers to see if you can negotiate longer terms with them- it’s about preserving cash at the moment so that you’re able to ride the wave of this until you’re able to be back up and running again.

    I was on the Executive for a non-bank lender and am experienced in the collections processes around unpaid loans. If you want to chat some more about this please get in touch- I’m on LinkedIn and on here.

    Best of luck and hope you come through this.

    Sasha

    Here are some additional links that may be helpful.

    https://covid19.nzte.govt.nz/page/business-finance-guarantee-scheme This scheme essentially allows the bank to share the risk of a loan with the government so that they aren’t taking on all of the risk.

    https://www.stuff.co.nz/business/prosper/300010556/government-loan-scheme-now-open-to-small-businesses

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