HOW TO APPEAL CREDIT REFUSAL

The government’s range of Covid-related business supports, payment breaks from banks, and a pattern of SMEs focusing on conserving cash, have all combined to keep demand for credit muted in recent months. However, appeals to Credit Review have remained busy, according to Deputy Head Catherine Collins.

Credit Review provides an independent appeals and review process for business owners who are refused credit by AIB, Bank of Ireland, Permanent tsb and Ulster Bank. “We have seen an increased volume of applications despite lower credit demand,” says Collins. “We can look at appeals relating to restructuring as well as new credit, and we expect to be very busy in the coming year with appeals relating to both new credit and restructuring.

“More businesses will seek to refinance or restructure existing debt, possibly over a longer period, to reduce cash outflows in the short term to sustain the business. Restructuring following payment breaks last year will be tailored to business needs, and can be proposed by either the borrower or the bank.

“In either case, Credit Review can review the restructure proposal. If Credit Review supports the borrower, the banks must comply with our recommendation, or explain why not. In nine out of ten cases that we support, the bank will make the credit available.”

Collins advises business owners seeking bank credit to be wellprepared, with an up-to-date and realistic business plan. “Banks will analyse your financial accounts for the past three years as they want to know if your business was viable pre-Covid,” she explains. “The character of the borrower is also important. The business plan establishes whether the business

can pay the debt, but the bank also needs to know that the borrower

will pay the debt.”