SME Support Booklet

Our SME Support Booklet provides guidance, practical support, and information on repayment options available to business members experiencing financial difficulties, helping you engage early and work towards sustainable financial solutions.

SME SUPPORT

Supporting Your Business Through Financial Challenges

Arrears Support Department arrearssupport@alturacu.ie 053 94 88709

INTRODUCTION

We understand that your financial circumstances can change, and this can result in concerns about falling into arrears or already being in arrears on your Small and Medium Enterprise (SME) loan repayments.

We are committed to helping you, and have provided this support booklet to assist you at this time.

In December 2015, the Central Bank of Ireland published Regulations for Business Lending to Small and Medium Enterprises called the SME Regulations. The SME Regulations set out new requirements for lenders when dealing with SMEs who are facing or in financial difficulty, and apply to Credit Unions since 1st January 2017.

ARE YOU EXPERIENCING ONE OR MORE OF THESE FACTORS?

Cancelled Contract Unable to pay business bills Unable to pay wages Cash Flow concerns Increase in overheads Business not performing as predicted

REGULATIONS IN PLACE TO ASSIST SME BORROWERS

Central Bank SME Regulations (2015):

Protect SMEs in lending relationships. Require transparency in credit applications and decisions. Set rules for handling arrears and financial difficulties. Altura Credit Union fully adheres to and recognises SME Regulations to ensure comprehensive support for its members.

WHO DO SME REGULATIONS APPLY TO? The SME Regulations apply to “micro, small and medium-sized enterprises” and the SME Regulations define these enterprises as follows: Microenterprise: Fewer than 10 employees Annual turnover or balance sheet total ≤ €2 million Small Enterprise: Fewer than 50 employees Annual turnover or balance sheet total ≤ €10 million Medium Enterprise: Fewer than 250 employees Annual turnover ≤ €50 million or balance sheet total ≤ €43 million Applies To: Businesses seeking credit from regulated lenders in Ireland Covers Lending, arrears handling, and appeals processes

The SME Regulations define “financial difficulties” as: When your credit facility agreement/alternative arrangement has been in arrears for 3 consecutive months; In the case of an overdraft where the approved limit on the overdraft is exceeded by the borrower and remains exceeded for 90 consecutive days; Where the Credit Union has determined that the borrower’s circumstances are such that the ‘financial difficulties’ provisions of the SME Regulations should be applied to the borrower. WHEN AM I CLASSED AS BEING FINANCIAL DIFFICULTIES AND / OR ARREARS?

WILL YOU CONTACT ME IF MY ACCOUNT IS FALLING INTO ARREARS? When arrears first arise on your account, we will contact you within 15 working days to advise of the status of your account, the applicability of the SME Regulations, and the availability of this Information Booklet. We will also offer you the option of an immediate review meeting to discuss your situation and any options available to you and will provide you with details of a designated contact point within the Credit Union. In order to properly assess each case on its own merits, it is vital that you furnish all information requested by us immediately so that we can assist you in meeting your obligations within a realistic time frame. If you have a preferred way to communicate, please let us know, and we will do our best to use that method. Generally, we use a combination of email, text messages, and phone calls, and there are some standard letters we'll need to send as part of this process. We will need to communicate with you: - if we need to clarify some information. - if you haven't responded to us in an agreed timeline. - if you haven't met a payment arrangement. We will make sure we only make contact when necessary and have trained and knowledgeable staff if you would like to discuss any aspect of your loan arrears.

FOUR STEPS TO GET BACK ON TRACK It’s important to engage with us as soon as you think there is an issue with 1 - ENGAGE We will assess all the information you supply us to come up with the best options for you, and your situation. 2 - ASSESS

repaying your loan. By engaging, we can work with you to achieve a solution

3 - OPTIONS We will talk you through your options to get through the present difficulties. We will answer any queries

4 - BACK ON TRACK

You will soon be back on track once you keep communicating with us, and adhere to the terms of the chosen option. Better times are ahead.

you might have on selecting an option.

STEP 1

EARLY ENGAGEMENT We recommend that SMEs who are in or facing financial difficulties contact us as soon as possible so that a possible solution can be discussed and approved. The SME Regulations set out clear guidance for SMEs who are either in or facing financial difficulties, and we recommend the following: SMEs who have concerns about their future ability to repay or discharge their financial commitments to the Credit Union, contact our Arrears Support Team by phone on 053 9488709, or by email - arrearssupport@alturacu.ie as soon as possible to discuss the situation.

INITIAL MEETING & ASSESSMENT STEP 2

Up to date financials including annual audited (or draft) quarterly management accounts Up to date business plan including details of your trading performance in the last 12 months plus outlook for the next 12 months Estimate or independent report on property valuation (if applicable) Six months current account statements for the business. Confirmation that the tax affairs of the business and named borrowers and/or material shareholders are up to date and in order

What will be required:

Cash flow projections for the next 12 months

Up to date list of debtors and creditors

Up to date Statement of Affairs for all named borrowers, material shareholders, or guarantors as required Completion of a Standard Financial Statement (SFS) where you have been advised to do so

Any other information we feel is relevant for the review and the assessment.

INITIAL MEETING CHECKLIST STEP 2 Below is a checklist of things we may ask for. You can use it as a guide to help ensure you are prepared for the initial meeting. Ready Not Needed

Up to date financials including annual audited (or draft) quarterly management accounts Cash flow projections for the next 12 months Up to date business plan including details of your trading performance in the last 12 months plus outlook for the next 12 months Up to date list of debtors and creditors Estimate or independent report on property valuation (if applicable), 6 months current account statements for the business. Up-to-date Statement of Affairs for all named borrowers, material shareholders, or guarantors as required Confirmation that the tax affairs of the business and named borrowers and/or material shareholders are up to date and in order Completion of a Standard Financial Statement (SFS) where you have been advised to do so

Please note that there may be additional information we consider relevant for the review and assessment.

After the assessment phase, we will have a thorough understanding of your individual circumstances. This will allow us to assess your eligibility for alternative repayment options or solutions. Our goal is to support you and your business during this challenging period by working together. Upon gathering and reviewing all information related to both your personal and business finances, we will guide you in exploring all possible options. While we cannot guarantee a specific outcome, our dedication lies in finding a suitable resolution for you. Offering an alternative arrangement: We will advise you within 15 working days from receipt of the information needed whether we are offering an alternative arrangement. Complex reviews or exceptional circumstances may take longer. If this is the case, we will let you know how long it will take and why it will take longer than 15 working days. ALTERNATIVE ARRANGEMENTS STEP 2

The timeframe to avail of the alternative arrangement. The new repayment amounts, the number and frequency of those repayment amounts WHERE WE OFFER AN ALTERNATIVE ARRANGEMENT TO YOU, WE WILL NOTIFY YOU OF: STEP 2 arrangement including impacts on the term of the credit agreement, balance outstanding on the account and monetary amount of any arrears on the account. The frequency that the arrangement will be reviewed. The residual debt at the end of the arrangement (if applicable) How interest and charges will be applied as a result of the arrangement How the alternative arrangement will be reported to the central credit register and that it may impact your credit rating A statement highlighting your right to seek independent legal and financial advice and a recommendation to do so. The term of the alternative arrangement The implications arising from the alternative

POSSIBLE ALTERNATIVE ARRANGEMENT OPTIONS OPTIONS AND SOLUTIONS STEP 3

OPTION 1

Temporary Reduced Payment Arrangement A temporary reduction in payment is considered when there is a short-term impact to the business which is reasonably expected to be resolved.

Interest Only Period During an interest-only period no payments are made off the capital, so the loan balance is not reducing.

Important To Remember Arrears will accrue during the time that full contractual payments are not made and will need to be addressed after either of these options have matured.

POSSIBLE ALTERNATIVE ARRANGEMENT OPTIONS OPTIONS AND SOLUTIONS STEP 3

OPTION 2

Permanent Arrangement Loan reschedule / term extension – Rescheduling loans can make the loan more affordable for the member by reducing the payments and extending the outstanding loan over a longer term. Information Regulations allow lending to extend beyond standard limits of 10 years for unsecured and 35 years for secured lending in these scenarios*; however, careful consideration will be given by Altura Credit Union to the longer-term impacts on cost of credit and suitability for each borrower’s situation.

Important To Remember If a member’s situation improves, they always have the ability to increase repayments to reduce the overall term of the loan without any early repayment penalties or charges (subject to fixed rate product terms and conditions).

POSSIBLE ALTERNATIVE ARRANGEMENT OPTIONS OPTIONS AND SOLUTIONS STEP 3

OPTION 3

Disposal of Loan Security Where the loan is secured against a personal or business asset which is immediately redeemable, consideration may be given to the impact of disposing of that asset to clear some or all of the loan balance. This is assessed on a case- by-case basis based on the criteria set out above as well as any other relevant information.

STEP 4 BACK ON TRACK

Arrears Arrears that may have accrued will need to be addressed, by increasing the original agreed repayment. Temporary Reduced Payment Arrangement Temporary Reduced Payment Arrangement – complete: it is hoped you will be able to revert to the original loan repayment amount. Permanent Arrangement Permanent Arrangement: You have entered into a new credit agreement, with an extended term and cost to your original loan. Once you adhere to the new terms and conditions, you are considered to be back on track. Applying for further credit with ACU is restricted for a period of 12 months. Realised Security If you have provided security on the loan, and this is realised (e.g. sale of security pledged), you remain liable for any shortfall that may arise, and possible legal costs associated with the disposal of the security pledged. Impact on Your Credit Rating Your credit rating may be affected by arrears on your account. Where applicable, records for credit reference agencies or any other credit register, where permitted by contract or required by law, are updated when arrears arise on accounts. This may also have an impact on your ability to avail of additional credit products in the future.

WHAT IF I DO NOT CO-OPERATE OR ENGAGE?

In most cases, we hope that with proactive engagement and ongoing support, Altura Credit Union can communicate effectively with each member during any difficulties and resolve the situation accordingly.

However, where a member in financial difficulties refuses to engage or fails to be open and transparent about their situation, they may be defined by Altura Credit Union as not co-operating.

WHAT DOES BEING CLASSIFIED AS “NOT CO-OPERATING” MEAN? The borrower has failed to make a full and truthful disclosure to the regulated entity of the information required by the regulated entity to assess the borrower’s financial situation, within the timeframe specified by the regulated entity, The warning letter, required in accordance with Regulation 20(8), has been issued to the borrower. The borrower has not carried out the action or actions within the timeframes specified in the letter. As set out above, ACU will issue a warning letter to a member who may be considered to be not co-operating. This letter will outline specific reasonable and proportionate actions that the member needs to complete within no less than 20 working days (e.g. providing the information requested to assess alternative options corresponding to specific queries about the loan or business).

YOU CAN APPEAL You can appeal a decision made by us during the process, including where:

We offer you an alternative arrangement but you are not willing to enter into the arrangement offered.

We have classified you as ‘not co-operating’.

We decline to offer an alternative arrangement.

Appeals Board Arrears Support Dept. Altura Credit Union Ltd. McDermott St., Gorey, Co. Wexford. Y25 XV05

YOU MUST WRITE TO US WITHIN 20 BUSINESS DAYS OF RECEIVING A LETTER FROM US IN RELATION TO ONE OF THE ABOVE SCENARIOS, SETTING OUT THE REASON FOR THE APPEAL, AND ADDRESS YOUR APPEAL TO:

The Appeals Board will acknowledge your appeal in writing within 5 business days of receiving your appeal. The Appeals Board will provide you with regular written updates on the progress of your appeal at intervals of not more than 20 business days. The Appeals Board will consider and adjudicate on your appeal within 40 business days of receiving the appeal and will notify you in writing of their decision within 5 business days of their decision. If you are unhappy with a decision of the Appeals Board, you have the right to refer the matter to the Financial Services Ombudsman (see Useful Contacts on pages 17 & 18).

Altura Credit Union Ltd. The arrears support department are on hand six days a week to discuss your situation with you. You will be dealt with in a compassionate and professional manner at all times. We strongly recommend regular communication. USEFUL CONTACTS 053 94 88709 (Direct Line) arrearssupport@alturacu.ie www.alturacu.ie Small Companies Administrative Rescue Process (SCARP) SCARP simplifies debt restructuring for viable small businesses with temporary issues.

StepChange Debt Charity Ireland StepChange Debt Charity Ireland (www.stepchangedebtcharity. ie) is a free and independent telephone advice service for people who are struggling with debt or mortgage payments. They will review your financial circumstances and recommend the best way for you to deal with your debts.

Telephone 1800 937 435

Money Advice and Budgeting Service (MABS) MABS (mabs.ie) offers free and confidential independent advice and assistance with managing your finances. You may wish to seek assistance from MABS

Telephone 01 727 2100 Email - enquiry@neh.gov.ie

Telephone 0818 072 000

Local Enterprise Office Your local first-stop shop for seeking information and support on starting or growing a business in Ireland. Wexford Telephone: 053 919 6020 Email: info@leo.wexfordcoco.ie Carlow Telephone: 059 91 29783 Email: enterprise@carlowcoco.ie Wicklow Telephone: 0404 30800 Email: enterprise@leo.wicklowcoco.ie

Local Chamber of Commerce Provides its members with a wide range of business development services as well as lobbying, representation and policy development.

Website: www.chambers.ie

Citizens Information The Citizens Information Board is the statutory body which supports the provision of information, advice and advocacy on a broad range of public and social services including health, employment, social welfare and money. If you are in arrears or are worried about arrears. USEFUL CONTACTS

The Central Bank of Ireland The Central Bank’s website

provides independent information on financial products and includes a consumer guide to dealing with

your lender on the Code of Conduct on SME Arrears.

Telephone 0818 681 681 www.centralbank.ie

Telephone: 0818 074 000 www.citizensinformation.ie

Insolvency Service of Ireland Under the Personal Insolvency Act 2012, you have the right to consult with a Personal Insolvency Practitioner. For more information, please refer to their website at:

Department of Social Protection The Social Welfare website provides information relating to job seekers allowance, mortgage interest supplement and other welfare benefits you may be eligible for.

www.isi.gov.ie

Business Networking Ireland Connects businesses with a trusted referral network and peer support, helping members generate new opportunities and rebuild cash flow

www.welfare.ie

Office of the Revenue Commissioners

This website will provide you with information on all tax credits and benefits you may be entitled to.

Telephone 094 934 0060 Website: www.bni.ie

www.revenue.ie

Financial Services & Pensions Ombudsman Bureau

Telephone: 01 567 7000 E-mail: info@fspo.ie

OTHER IMPORTANT INFORMATION:

Credit reference agencies If you are in arrears, details will be recorded by credit reference agencies such as The Central Credit Register. This could make it more difficult for you to get credit from us or other financial institutions in the future. For example, you may have difficulty getting a loan, overdraft or credit card.

Legal proceedings We only start legal

proceedings if you fail to adhere to any resolutions that may be offered to you. Ongoing active engagement in accordance with this booklet is the best way to avoid any adverse course of action.

NOTES

REGULATORY WARNINGS If you do not meet the repayments on your credit agreement, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit in the future. Warning: Warning: Your home is at risk if you do not keep up payments on a mortgage or any other loan secured on it. Warning: The payment rates on your loan may be adjusted by the lender from time to time Warning: The cost of your repayments may increase. Warning: The entire amount that you have borrowed will still be outstanding at the end of the interest-only period. This new credit facility may take longer to repay than your previous credit facilities. You may pay more than if you paid over a shorter term. Warning:

AS GUARANTOR

As a guarantor of this credit, your personal assets, including your home, may be at risk if the borrower does not keep up repayments on this credit facility agreement. Warning: As a guarantor of any credit, you will have to repay the debt amount(s), any interest and all associated charges if the borrower(s) do(es) not. Before you sign this guarantee you should get independent legal advice. Warning:

SME SUPPORT

Supporting Your Business Through Financial Challenges

Arrears Support Department arrearssupport@alturacu.ie 053 94 88709

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