Is your business unable to operate during this time? Whether your fleet is providing a partial or no service, now is an opportune time to prepare your business for post-COVID-19.
CEO of Partners Finance & Lease, Francis Fitzgerald explains what NZ Trucking Association members can do to ensure they have the best options available when applying for support like a bank loan or asset finance during this time.
Francis explains: “The next few weeks will be a trying period for businesses however we remain hopeful that with the Government’s COVID-19 measures we will come out of this sooner than expected. We are all working closely with business owners to help where we can. Examples of this include the Government and banks working together to deliver the Business Finance Guarantee Scheme (more information on this below). The Government and banks will have specific terms and conditions around this. Meanwhile, here are some financial fundamentals that businesses can prepare to ensure they are best placed when applying for additional support when the lockdown is lifted.”
Prepare for post COVID-19
There are three credit fundamentals that underpin any bank loan or asset finance application. Ensure you can provide your lender with proof of the following:
- Character: This is about you – how can you prove to a lender that you have the ability and honesty to repay the loan? Repeat business is the ultimate testimonial. Positive feedback from your suppliers and clients will also help, your personal circumstances will also be considered.
- Capacity: Aka your business cashflow. All lenders will be looking at your ability to repay the loan, what are your financial projections?
- Collateral: What security do you have available to secure your loan? Existing assets, equity, etc.
If you haven’t already, now is the time to collect the documentation you need to support any finance or loan application. The following will be essential:
1. Capacity – cashflow projections: Any lender will want to see how best placed you are you to survive this period. Now is a good time to talk to your accountant and obtain business projections. The Government has a number of useful cashflow templates that can be downloaded here: https://covid19.nzte.govt.nz/page/useful-tools
2. Collateral – fleet valuations: Seek valuations to prepare for lending against your existing fleet. Who do we recognise as a valuer? As well as a registered valuer this can also be the dealer who you purchased the vehicle from / has a sound knowledge of your fleet history. While it may not be possible to visit a registered valuer, if you can talk to your dealer now and obtain the information you need, this will be useful for a lender to draw on when the lockdown is lifted.
Useful information to have, includes: reg number, the number of KMs on the truck, and where applicable a brief description of the truck i.e. stock truck / steel / alloy body / bin tipper / tractor unit / refrigerated curtain sider
In the meantime, Partners Finance & Lease is committed to the safety of our employees, clients and business partners. We are closely following the Ministry of Health’s advice and while our Christchurch and Auckland offices are off limits, our team is working remotely from their homes to ensure we can continue to provide services and support with the least possible disruption.
We are working closely with clients who are adversely affected and have had their income reduced or workload stopped due to the COVID-19 situation. Please contact us directly to discuss your circumstances.
Further information has also been released about the Government’s Business Finance Guarantee Scheme. Under this scheme, businesses with annual revenue of between $250,000 and $80 million can apply to their banks for loans up to $500,000, for up to three years. The Government is guaranteeing 80% of the credit risk, while the banks will cover the remaining 20%. A normal lending process will be followed by your bank, which will make the lending decisions.
For more information about the Business Finance Guarantee Scheme click here or go directly through your bank.
Please note this article is for informative purposes only and does not constitute legal advice.
We will continue to review the impact of COVID-19 closely and update you as required. In the meantime, please contact Commercial Asset Finance Manager Clive Murden on 021 870 527 for further information.
Take care and kia kaha.
Francis Fitzgerald
CEO – Partners Finance & Lease