St. Colman’s Credit Union approach to dealing with SMEs in or facing financial difficulties
We will work with you should you get into ‘financial difficulty’ to determine a way forward and maintain internal policies and procedures in compliance with the SME code.
Our approach is as follows:
- We stress the importance of as early contact as possible with the credit union regarding Financial Difficulties.
- Inform us of the impact the financial difficulties may have on any other facilities you have at the credit union.
- Engage fully with us to agree an approach and a way forward. It is very important that you co-operate fully with the credit union including reverting with information requests within requested timelines.
- Provide business information the credit union might request to fully assess the situation.
- Review your facility with us regularly and advise us of any change in circumstances.
The SME Regulations make clear distinction and set out clear guidance for members either facing or in financial difficulties. The credit union will offer the borrower the option of an immediate review of the borrower’s credit facility and security if applicable.
The credit union will write to you to advise of the status of your account when ‘financial difficulties’ first arise, the applicability of the SME Regulations and the availability of our information booklet. Business information requested might typically include and not necessarily limited to the following;
- Most recent/Up-to-date financials/trading accounts.
- Cash flow projections for next 12 months.
- Confirmation of tax position.
- Proposal for dealing with all credit union and third party debts.
- Up-to-date property valuations.
- Up-to-date bank statements.
- Statement of affairs updated.
The credit union will conduct a full assessment of your financial position following receipt of all requested business information. An Alternative Arrangement may assist in resolving your financial difficulties and might include elements of interest only, reduced repayment incorporating some capital element and term extension.
The Regulations detail the minimum information to be provided to borrowers where an alternative arrangement (i.e. an arrangement with a borrower to modify the terms of the loan) is being offered. This includes:
- The timeframe for the borrower to avail of the offer of the alternative arrangement,
- Details of the revised repayment amounts on the credit facility,
- The impact on the arrears amount and the operation of the facility and the amount of or determination of any residual debt remaining on the expiry on the alternative arrangement.
A credit union is obliged to inform a borrower, if it decides not to offer an alternative arrangement or if a borrower declines to accept the offer of an alternative arrangement, of the implications for the borrower, of those decisions.
Impact of Arrears on other credit products and credit rating.
Information with respect to arrears on your credit facility may be shared with a credit reference agency or credit register (required by law). Your credit rating may be adversely affected. This may impact your ability to avail of additional credit facilities in the future.