The COVID-19 pandemic has raised many new questions for businesses. Those with bank credit have many options for requesting loan extensions, credit lines, and payment postponement with their banks. Below, the MCM COVID-19 Solutions Group answers many of the frequently asked questions businesses have about interacting with banks after being impacted by coronavirus.

What should I do now if I am concerned about my existing bank loans and credit lines?

Give your bank contact a call right now to discuss! Bankers are available and want you to call them.

What if I don’t have a bank contact? Who should I call?

We have contacts at most banks and can help you connect with them.

What kind of response can I expect from the bank?

Banks are very understanding of your situation and are being flexible with borrowers in nearly all cases.

I can’t make my monthly payments right now! What can they do to give me relief?

Banks are giving 90-day extensions on loan payments for nearly all of their borrowers who request them.

Are banks deferring principal and interest?

In most cases, only principal is being deferred, but banks have also been deferring interest in some cases.

Should I request other forms of relief such as the lowering of my interest rates?

Some banks may consider lowering interest rates, although it is less likely than extensions of payments.

How do these extensions work?

Payment extensions are made by phone call request. The bank may simply respond to your request verbally or may send you something like a simple questionnaire to complete and send back.

I have an SBA 7A loan and/or a 504 loan, are those loan payments being extended?

Yes, for up to 6 months. Approach your bank to request and ask for the full 6 months. They will lead you through the process with the SBA.

How long does the process take?

24 hours to a few days in most cases; perhaps longer for SBA guaranteed loans.

What if I need more than a 90-day extension?

At the end of your 90-day extension, banks will consider another 90-day extension if needed on a case by case basis.

What happens at the end of my extension?

Your loan payments resume at their regular amount with deferred principal payments due at maturity.

What about my line of credit?

In most cases, 90-day extensions on interest payments are being handled on the same basis as for term loans.

My line has availability but I am not currently using all of it.  I think I will still need it in the next few months.  Should I be concerned about my bank cancelling my line? How should I approach this situation?

Read your loan documents (Commitment letter, note, loan agreement) to see what your rights are.

Should I draw down my entire line to be safe and put it in my account until I need it?

That is your decision if it makes you feel safer, but it is dependent on your conclusions after your bank document review and your degree of comfort with your bank and banker.

I have loan covenants and other requirements that I am not going to be able to meet; what are banks doing about these situations?

In most cases, banks are giving borrowers temporary relief and are postponing lender rights to act including not charging late fees.  But you need to approach your bank directly to request this forgiveness and discuss your particular situation.

Can banks help me with any new credit needs I have now to get through this crisis?

Many banks are considering new loans if you have the cash flow and financial strength to handle them. In situations where cash flow and financial strength are insufficient, you can apply for Economic Injury Disaster Loans (EIDL) and/or Payroll Protection Loans available through SBA or other state or local agencies. See “How To Make Sense of the SBA Loan Opportunities” for more information.

I am hearing in the news about SBA programs as a result of The Cares Act; who should I talk to about questions I may have?

First of all, talk to your historical bank contact to get familiar with their process.  However, your best source for information and questions specific to your business or organization would be your CPA Firm.

We’re here to help.

Feel free to reach out to your MCM contact directly or email covidbank@mcmcpa.com. Do not be hesitant to reach out as time is of the essence. We are prepared to help you quickly.

Nothing in this document should be construed as providing tax advice.  Please consult with your own professional tax advisor.  In addition, this document represents the information that we have up to the date the presentation was made and cannot be relied upon for additional updates beyond that date.