Although the country has begun to open back up, the pandemic will continue to have a lingering effect on businesses long into the future. Lenders entertaining new borrower applications or conducting annual reviews should gather information from borrowers regarding the impacts of the pandemic on their business and financial situation.
Here are some key questions to ask your commercial borrowers to get the full picture:
- – Did the business obtain any PPP loans, EIDL loans, or other stimulus financing?
– How has the industry/sector been impacted by the pandemic?
- – Has the pandemic had any impacts on the business’ revenue?
- – What are other impacts on the business’ operational costs such as providing protective gear, cleaning materials, and essential costs to ensure the safety of customers and employees?
For Investment Real Estate:
- – Have any tenants closed due to impacts or restrictions resulting from the pandemic?
- – Have any previous or current tenants sought rent abatement as a result of impacts of the pandemic?
- – Are any tenants behind on rent? By how much and what arrangements have been made to bring them current?
CUBG also suggests asking borrowers to provide a written plan detailing how any adverse impacts resulting from the pandemic are being addressed.
Additional guidance/questions to ask your borrower can be found in this COVID-19 Borrower Questionnaire.