Whenever any kind of crisis hits markets or economies, it’s important to consider the type of reaction and response that might be needed. At ABN AMRO, we were quick to recognise the need for a calm, measured but significant response as the Coronavirus pandemic began to spread across the world.
A rapid response force
Through our UK taskforce, we’ve been able to adjust certain terms on our products to ensure we’re able to continue to support our clients and maintain our partnership approach. For example, in the Commercial Finance business, when there is such an understandable focus on cash management, many clients have relied on us for help. Where possible, we’ve introduced a number of measures:
- Increased pre-payment percentages up to 100% for affected clients, giving them an immediate boost against the level of their invoices.
- Introduced top-up facilities and cashflow loans, providing additional flexibility to support working capital.
- Relaxed covenants, reflecting the current crisis impact.
In addition to our own initiatives, as an accredited lender of the British Business Bank, we’ve also been able to provide clients that meet the required eligibility criteria with the Coronavirus Business Interruption Loan Scheme (CBILS) product. This can provide facilities for businesses across the UK who are experiencing lost or deferred revenues as a result of the pandemic.
Across our Lease business (and to a lesser extent Commercial Finance) we have implemented payment holidays for up to six months for clients in need, providing the much needed breathing space for them to survive.
So far, these combined initiatives have led to us positively supporting over 95% of requests across our UK client portfolio.
The taskforce set up allowed us to provide these solutions on a case by case basis, to support not only existing but also prospective clients with bespoke solutions. This has been recently demonstrated by the addition of some new clients to our portfolio, including a new Asset Based Lending facility for the Reflex Group.
In the second phase of our taskforce, we will use the set up and the local teams to look at recovery mode and to assess when and where things might be able to normalise again.
In truth, the impact of and reaction to Covid-19 and lockdown has been uneven across sectors. It’s clear some industries have been hit badly by a cessation of business, often with no clear sense of when things might return to normal. But other sectors have carried on and some have even seen an uptick in business, enabling us to also take on new business during these challenging times.
Understandably, therefore, conversations with clients have been a mixed bag. Many are stressed about the future, whilst others, such as businesses supplying to food and pharma markets, are generally doing well. Examples here include clients who required our support in fulfilling PPE orders, shelving and IV stands for the NHS. Some of these exceptional cases required funding over and above the asset values to support these businesses and the fight against the pandemic, which we gladly offered.
Wider government support has also provided some much-needed breathing room for many businesses. And I’ve also noticed a lot of strong management teams stepping up to the fore. They are the ones that are planning ahead, preserving cash, cutting costs and doing whatever it takes to make sure their business is robust enough to survive.
Where do we go from here?
This is an unprecedented crisis in so many ways. It's great that ABN AMRO has been able to be part of this hugely supportive industry-wide initiative, together with the UK government and that collectively we have been able to introduce these support measures, but it can't last forever. At some point, the economy will need to bounce back.
Along with our clients and the economy as a whole, we all want to get back to business as usual. But we need to recognise we may never return to pre-Covid ways of doing business. This means looking at how we operate as a forward-thinking Asset Based Lender to continue to best support UK businesses, particularly as they adapt to new ways of working. A good example of this is one of our Lease clients who televise live sporting events. With Covid measures easing, sports are making a comeback, but in many cases without the spectators. This means that additional funding is required to purchase equipment to support the increased demand for televised viewings. Something many of us will no doubt be looking forward to!
It’s the economy, after all
What next for the economy? If you compare the most positive projections to the most negative, you'll find a range of opinions. This is uncharted territory for us all. Most think there will be a significant reduction in the economy, a recession or perhaps depression. Others feel that we will see an uptick later in the year and slow return to normality.
I am pleased with our response to the pandemic. We acted early, listened to clients and developed bespoke services and adjustments to terms to reflect their needs. We have looked after staff and made sure they are well equipped and mentally strong to tackle what look to be stormy times ahead.
Our strategy is to continue to support the economy by providing UK businesses with additional sources of funding. We are adjusting the tools we use for assessing new business and continue to take on new clients where we can. We exist to be good business partners to our clients and it’s simply not in our DNA to turn our backs on them when times get tough. If we can help a client get a deal across the line, we will pull out the stops to make it happen. This is an era-defining moment for Asset Based Lending and I am proud that we have acted decisively to help our clients, our staff and the economy as a whole.
About ABN AMRO Asset Based Finance
ABN AMRO Commercial Finance and ABN AMRO Lease are trading names of ABN AMRO Asset Based Finance N.V. Together they are a leading provider of cross border Asset Based Lending and Leasing finance solutions, operating in the UK, Netherlands, France and Germany. They offer a range of business funding solutions and specialise in refinancing or recapitalisation, acquisition finance, asset based finance and financing growth.