Credit Review is the state agency that was established to ensure the flow of bank credit to viable businesses, and intervenes with banks on behalf of business borrowers whose credit application was declined.
Catherine Collins, Head of Credit Review, says that at the moment existing loans are commanding much of the agency’s attention.
Banks and borrowers often want to restructure existing debt but cannot agree how best to do it. Additionally, the exit of Ulster Bank and KBC from the Irish market is leaving some borrowers stranded in a limbo they didn’t anticipate when drawing down the facility – now they will need to refinance to a remaining bank.
As Ulster Bank winds down operations, Credit Review is engaging with many of its SME customers as they seek a satisfactory arrangement with another bank. However, some of the remaining banks are scaling down their relationships with SMEs with a track record of repayment difficulties.
“Between the unwinding of government supports like Revenue warehousing, and Ulster Bank customers that don't move satisfactorily to the remaining banks, we could be very busy in the coming year,” says Collins.
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Credit Review’s intervention is also sought when banks and SMEs disagree over restructuring proposals. “We have seen a lot more restructuring of existing debt so that the borrower can make their loan repayments,” Collins adds.
This process has accelerated in the past quarter, she reports, as borrowers begin to repay all debts that have built up over Covid, including suppliers and warehoused Revenue debt.
“Our advisers will ask a client, have you agreed a plan with Revenue and how much are you going to pay? Will there be enough left to pay the bank?”
Credit Review recently recruited a new panel of assistant reviewers, many of whom are former bankers who dealt with SMEs and who are now debt advisers, restructuring specialists or mentors with local enterprise offices.
A common scenario is where a borrower is refused credit after seeking a large sum. A Credit Review advisor might see that a combination of an overdraft and a smaller term loan suits their needs just as well. The bank often agrees.
“Putting together a slightly altered application or different loan structure often makes it doable for the bank and also meets the needs of the borrower,” says Collins.
