We understand that many of our clients may be struggling financially due to the ongoing impacts of COVID-19.
As a result we thought it vital to share the following templates:
- Draft template letter to bank requesting loan relief,
- Draft template letter to landlord for rent relief
Please feel free to circulate these templates to whoever you feel it may assist.
DRAFT LETTER TO BANK
Dear (insert name of bank manager or contact),
In these difficult and uncertain times, we welcome the continued support of (insert name of bank).
Given the impact of the recent events of the COVID-19, we request your consideration on the following matters.
Treatment of interest and principal repayments under new facilities. Given the potential significant impact of COVID-19 on the short-term financial performance of our company, we consider it prudent to commence planning for a worst-case financial scenario for the business. The objective of this plan is to retain sufficient liquid and cash reserves to meet all our short-term commitments and obligations.
To this end we have commenced the following activities;
- Commenced negotiations with landlords to reduce, suspend or defer, current monthly and other payments under our lease contracts, as other retailers are also doing currently.
- n line with turnover, reduce direct labour expenses. Initially this will impact our casual workforce but will likely also result in full-timers taking annual leave and other strategies.
- Reduced all other non-essential expenditure, including flight and travels costs.
Consistent with this strategy we also request that insert name of bank consider the following strategy;
That we suspend interest and principal repayment for all existing contracts for a period of six months, or until such time as the impact of COVID-19 has passed. This will retain significant financial resources for our business to meet our other obligations.
Treatment of interest and principal repayments for existing equipment finance contracts. Similar to the request above, we request that insert name of bank suspend interest and principal repayment on our existing equipment finance contracts, for a period of six months, or until such time as the impact of COVID-19 has passed.
Final quarterly repayment of 12-month ATO loan amount. We request that insert name of bank also postpones the final quarterly repayment on the ATO loan for a period of six month, or until September 2020.
It is critical that our company remains solvent during this period of unprecedented health and economic events. Economists recently suggested that Australia’s economy may shrink by 15% in the second quarter of 2020 and unemployment may drive to 20%, without substantial government and industry assistance.
As a large employer, our firm has a social responsibility to its employees and to the wider Australian community during this current crisis.
Prime Minister Morrison has stated that the duration of economic disruption is that six months is an indicative and he does not think at this point, that it will be any less than that.
Mr Morrison has also said that this has a much more profound impact on the economy, and there are many things that will be hard to predict going forward, but as we adjust and upgrade and scale our response, then that will also require adjustment to other responses that we’re making, and I think in the area of the economic impact, what we’re seeing here is that we haven’t seen this for a very, very long time.”
Mr Morrison has called on all Australians to keep Australia running and reiterating that jobs are critical, that Australians need to continue to keep our heads focusing on the right information, making good decisions, helping and supporting each other each and every day to make the changes that are very necessary, as we deal with this very real situation.
Our business now seeks your support.
We note that the central bank has announced a bond buying program as well as a fresh $90 billion line of credit to banks with incentives to pass on cheap rates to small and medium sized businesses. The government has provided $15 billion to small banks and non-bank institutions to help with their funding.
This announcement recognises the significant impact of the COVID-19 on the economy and the targeting of providing support to small and medium sized businesses as key drivers of the economy.
We are happy to meet further with insert name of bank to discuss further.
DRAFT LETTER TO LANDLORD FOR RENT RELIEF
Dear (insert name of Landlord of contact)
I welcome your continued support and requests the following considerations in relation to the unprecedented COVID-19 event.
The business has moved quickly to manage the recent impacts of COVID-19. Out of concern for our customers, clients and employees and members of staff we have:
- Been proactive in implementing best practice for business by putting in place processes for conducting business and implementing social distancing protocols.
- Implemented service best practice for staff and public safety.
I must also ensure the business remains solvent and unquestionably strong for the duration of this crisis. For this reason, I have undertaken the following strategies:
- I am currently negotiating short-term financial support from our Bank to preserve cash and reduce interest costs.
- In line with turnover, we will manage direct labour expenses. Initially this will impact our casual workforce but will likely also result in full-timers taking annual leave and other strategies.
- I have reduced all other non-essential expenditure, including flight and travel costs and have requested waiver on our merchant and other transaction fees.
In line with these strategies I also request that you consider the following support so that I can continue to support my staff and maintain as much as my workforce as possible and continue to serve my customers during these unpreceded times.
Rental concession request
- I request to suspend all current rental payments for a period of 90 days, or until such time as the impact of COVID-19 has passed.
- Thereafter we should agree to a level of turnover rent (threshold and percentage) that recognises that although the health crisis may have passed, normal business patterns may take some further time to normalise.
It is critical that the business remains solvent at all times during this period of unprecedented health and economic events. Economists have suggested that Australia’s economy may shrink by 15% in the second quarter of 2020 and unemployment may drive to 20%. This may prove to be understated.
Employers have a social responsibility to their employees and to the wider Australian community during this current crisis.
I have seen turnover decline significantly and am continuing to monitor it closely.
Prime Minister Morrison has stated that the duration of economic disruption is that six months is indicative only and he does not think, at this point, that it will be any less than that.
I am happy to meet and discuss all aspects of this request.