27th April 2020

Funding Requirements – Practical Steps for Businesses in Light of Covid-19

With COVID-19 having a significant economic impact on businesses across the spectrum, it has become necessary for all businesses to closely assess their financing requirements and current arrangements.


  • Review cashflow requirements – If a significant shortfall is predicted, assess whether business can absorb this or whether additional financing may be required. Businesses with existing debt should ensure that they have the funds necessary to meet upcoming scheduled payments of principal, interest and fees. If cashflow is deteriorating, borrowers should consider approaching their lenders to seek to defer scheduled payments under existing financing arrangements or perhaps seek a wider postponement or re-arrangement of their debt.
  • Consider steps which can be taken within the business to preserve cashflow – This could include reducing or delaying expenditure, injection of shareholder funds or a disposal of assets. Many of these aspects may be short-terms solutions and may have implications for existing finance arrangements, if there is a requirement to seek consent from existing lenders to such proposed arrangements.
  • Review funding requirements – Borrowers should assess their ongoing funding requirements and, if they have additional unutilised facilities in place, confirm that they can satisfy any conditions attached to utilising these facilities.
  • Review existing facility agreements and security – Borrowers should review their existing loan and security agreements to ensure that they can continue to comply with their obligations and, in particular, takes steps to ensure that an event of default will not arise. We will be publishing a separate blog on this aspect shortly.
  • Review logistical arrangements and practicalities – Businesses should consider whether bank notices and signing formalities require to be amended to take account of new working practices. Does remote working give rise to difficulties or delays in complying with information delivery? Do contingency measures require to be put in place?
  • Get advice – Speak to your lending team and advisers for early advice. Matters that businesses will need to consider ahead of such discussions include:
    (i) Is the business eligible to receive support under the COVID-19 government backed loan arrangements?
    (ii) Is short-term relief, such as delaying interest and other scheduled payments or one-off waivers of covenant breaches, going to be sufficient?Or would permanent amendments to the loan arrangements be more appropriate?
    (iii) Could an injection of equity funds be used to remedy a financial covenant breach? Would owners/investors be willing to do this?
    (iv) Does the borrower have anything to offer to incentivise the lender to agree to amend or restructure the facility (for example, the provision of new security or guarantees or an increase to the margin)?
    (v) What restrictions are there in the existing debt documents on incurring further financial indebtedness and does the borrower need any consents to incur further debt?
    (vi) What impact would the additional borrowing have on any existing financial covenants?
    (vii) Where new facilities are sought, ensure that these are structured so that funds can be accessed quickly – short notice periods for drawing requests, signed by 1 authorised signatory and with limited conditions precedent for drawdown.
    (viii) Try to avoid early prepayment fees or utilisation fees that kick in too quickly to give borrowing flexibility.

If you require assistance on reviewing your existing loan arrangements, or advice on possible restructuring options, then please contact any member of our corporate team.

Suzi Low,
Associate Solicitor
Corporate & Commercial
Blackadders LLP



The opinions expressed in this site are of the author(s) only and do not necessarily represent the opinions of Blackadders LLP.

Blackadders takes all reasonable steps to ensure that the content of this site is accurate and up to date. The site is not, however, intended as a substitute for seeking legal or other professional advice but rather as an informative guide to the services provided by Blackadders and topical legal developments. Site visitors should always seek advice tailored to their specific situation. Consequently, Blackadders accepts no responsibility for any loss or damage suffered by anyone acting or failing to act on the basis of information contained on this site. Downloading of material contained on this site is at the user’s own risk and all necessary virus checks must first be carried out by the user. Blackadders is not responsible for the material found on any web sites linked to this one and links to this site may only be made with Blackadders prior consent.


Blackadders owns the copyright in this blog and all material contained on it. The material on this site may be downloaded for personal use only and must not be altered. Otherwise, Blackadders’ written consent is required before any material on this site is reproduced, copied or transmitted in any way.

Privacy Statement

Information passed to us via this site is kept confidential and will not be disclosed to third parties except if authorised by you or required by law.

© Blackadders LLP 2022

Members of the Law Society of Scotland.

Blackadders Solicitors is a trading name of Blackadders LLP, a limited liability partnership, registered in Scotland No SO301600 whose registered office is 30 & 34 Reform Street, Dundee, DD1 1RJ. Reference to a ‘partner’ is to a member of Blackadders LLP.

Back to Business Legal News from Blackadders Solicitors