Information Booklet for Small and Medium Enterprises in Financial Difficulty

Transcription

1 Information Booklet for Small and Medium Enterprises in Financial Difficulty This Information Booklet applies to Finance Ireland Credit Solutions Ltd t/a Finance Ireland Commercial Mortgages and Finance Ireland Leasing, and Everyday Finance Ltd t/a Finance Ireland Asset Management, who are regulated by the Central Bank of Ireland.

2 Contents Contents Pages Section 1 Introduction 3 Section 2 Scope of the SME Code and Definitions 4 Section 3 Our Procedures to support SME Borrowers in 5 Financial difficulties - Communication 5 - Financial Information Assessment 6 - Resolution 6 - Appeal 7 - Regular Communication 7 Section 4 Further Information for SMEs in or Facing 7 Financial Difficulties Section 5 Useful Contact Details 8 Page 2

3 Introduction In November 2011, the Central Bank of Ireland published a revised statutory Code of Conduct for Business Lending to Small and Medium Enterprises (the SME Code) setting out new requirements for lenders when dealing with Small and Medium Enterprises (SMEs) in, or facing financial difficulties. This SME Code is effective from 1 January This information booklet outlines the procedures to be applied where applicable by: Finance Ireland Credit Solutions Ltd trading as Finance Ireland Leasing and Finance Ireland Commercial Mortgages; and Everyday Finance Ltd trading as Finance Ireland Asset Management (Individually the Company and together the Companies ) We recognise that individual SMEs will vary by size, sector and type of credit product(s) held with us and therefore each SME in financial difficulties will be dealt with on a case by case basis. This will enable us to adopt a flexible approach to dealing with each customer s situation. We recommend that all customers read this information booklet carefully and contact the applicable Company as soon as possible if they are facing, or are in financial difficulties. The contact details are as follows: Finance Ireland Leasing at Tel: (01) Finance Ireland Commercial Mortgages at Tel: (01) Finance Ireland Asset Management at Tel: (091) Page 3

4 Scope of the SME Code and Definitions Scope of the SME Code The 2012 Code of Conduct for Business Lending to Small and Medium Enterprises applies to all business lending by regulated entities. This includes overdrafts, loans, term loans, leasing, hire purchase and invoice discounting. The objectives of the code are as follows: To facilitate access to credit for sustainable and productive business propositions; To promote fairness and transparency in the treatment of SMEs by regulated entities; and To ensure that when dealing with financial difficulties cases, the aim of a regulated entity will be to assist borrowers to meet their obligations, or otherwise deal with the situation in an orderly and appropriate manner. Definitions SMEs Small and Medium Enterprises and SMEs are as defined as enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million, and/or an annual balance sheet total not exceeding 43 million and shall include smaller enterprises. Smaller Enterprises Smaller enterprises is the following sub-category of small and medium enterprises: a) a natural or legal person or group of natural or legal persons, but not an incorporated body with an annual turnover in excess of 3 million in the previous financial year, acting within their business, trade or profession (for the avoidance of doubt a group of persons includes partnerships and other unincorporated bodies such as clubs, charities and trusts, not consisting entirely of bodies corporate) or b) incorporated bodies having an annual turnover of 3 million or less in the previous financial year (provided that such body shall not be a member of a group of companies having a combined turnover greater than the said 3 million). Financial Difficulties According to the Code a borrower must be classified as in financial difficulties 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. Page 4

5 Arrears The code defines Arrears as being 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. Our Procedures Our Procedures to support SME Borrowers in financial difficulties The Companies have clear procedures to assist our customers who are experiencing financial difficulties. There are six distinct steps to our process which we have outlined below: Step 1: Communication The first step is to talk to us. It is essential for you to address any warning signs of financial difficulty facing your company. If you find your business is facing financial difficulties you should contact our customer service team as soon as possible. Where financial difficulties first arise on your credit facility we will contact you to offer you an opportunity to review your case. At the review meeting we will look at the difficulties facing your business and work together in order to find a solution. It is very important for borrowers to engage fully when experiencing financial difficulties. The sooner you contact us, the sooner we can help find a way forward. Step 2: Financial Information The second step is to understand your finances. We will let you know what information is required for us to gain a clearer image of your business s financial circumstances. For us to make an assessment, the financial information we require will vary depending on the size and nature of a business but typically will include: 1. Financial Information/Projections Latest Audited Accounts Latest Management Accounts Up to Date Cashflow Statement Detailed Projections where available Aged Creditor and Debtor Reports 6 months current bank account statements for the business Estimate or independent report on property valuation (if applicable) Page 5

6 Our Procedures Step 2: Financial Information (continued) 2. Details of Current Tax Position A copy of your Tax Clearance Certificate where available 3. Up to date Asset/Liability profile of business and owners/promoters 4. Where applicable, details of your security position 5. Any other information the you may feel is relevant to review as part of your assessment Depending on your business, there may be further details and/or reports required to gain an understanding of your company s current position. You are free to gain independent advice or to bring your financial advisor/accountant/other with you to the meeting with us, provided there is full disclosure. Step 3: Assessment The third step is assessing your financial situation. We assess your situation on a case by case basis through the information provided in Step 2. We also consider your particular circumstances, your repayment capacity and repayment history. We will respond to you in writing with our decision regarding a proposed alternative repayment arrangement within 15 business days of receiving all of the required information. Step 4: Resolution Once a decision has been made with regards to an alternative repayment arrangement, we will write to you detailing all terms and conditions along with any fees or charges. To avail of the revised arrangement terms you must confirm your acceptance within 10 business days of receiving the proposal by post. We will then document the revised terms including any additional conditions to be met which will need to be accepted by both the Company and you. These new terms will only be effective following agreement with the new facility letter/arrangement or letter/agreement of amendment. It is important that you fully understand the implications and details of any new repayment arrangement before you commit to it. Therefore, you may wish to seek independent/financial advice. Page 6

7 Our Procedures Step 5: Appeal If we are not in a position to offer you an alternative repayment arrangement we will advise you of this in writing together with the reasoning for this decision. The Companies operate an internal appeals process where SME s are not satisfied with the outcome of the above process. All appeals must be submitted in writing to the Credit Appeals Officer, Finance Ireland Leasing, Finance Ireland Commercial Mortgages, or Finance Ireland Asset Management, 85 Pembroke Road, Dublin 4, within 25 business days following receipt of our decision not to offer an alternative repayment arrangement. We will consider your appeal and provide a written response within 15 business days of having received your appeal with our adjudication. Step 6: Regular Communication Review your progress with us regularly and advise us if your circumstances change. Further Information Impact of Financial Difficulties on Other Loan Facilities Held with the Companies When you are experiencing financial difficulties in respect of a credit facility held by you with the Companies this may have consequences for other loans that you hold either solely or jointly with other parties. It may also have consequences for you if you have provided a guarantee to the Companies in respect of loan facilities held by other borrowers with the Companies. The consequences will depend on the terms of the relevant loan documentation. Impact of Financial Difficulties on a Borrower s Credit Rating Arrears on a credit facility can affect your credit rating which may have implications should you apply for finance at some future date. Page 7

8 Reservation of Rights Please note that nothing in the SME Code or this information booklet prohibits the Companies from acting with all necessary speed: where in the circumstances of the case it is necessary to initiate a liquidation, receivership, examinership or similar insolvency event or where another regulated entity or other third parties initiate such actions; where it is necessary in order for the Companies to protect their legitimate commercial interests; or where there is reasonable evidence of fraud, terrorist connections, money laundering and/ or misrepresentation The provisions of the Code and this booklet are without prejudice to the Companies regulatory and/or legal obligations and legal rights to enforce any agreement including any security taken in connection with any agreement. Fees and Charges Detailed fees and charges applicable to your credit facility are set out in your loan agreement. The risk of incurring fees and charges can be mitigated by ensuring that all future repayments are made when they fall due. Additional charges for unpaid cheques, standing orders and direct debits can be avoided by ensuring there are sufficient funds in your account to pay these items when presented. Useful Contact Details Central Bank of Ireland Copies of the Code of Conduct for Business Lending to Small and Medium enterprises are available at Page 8