COVID-19 and Important Lender Conversations


Hi, this is John Geraci, managing partner
at LGA. Hope everyone’s doing well since governor Baker’s put in the uh, stay at home advisory,
and everyone’s staying safe and healthy. Just wanted to spend a couple of minutes and talk
to you about some of the things that you can do with respect to potentially deferring certain
obligations and payments to banks and financial institutions, as well as making sure that
you have the available liquidity that you need, uh, in the form of bank and financial
institution lending. Uh, so first just wanted to talk about some of the, uh, opportunities
that banks are giving to their clients to actually freeze, uh, principal and interest
payments on term debt and instead convert those, those notes to interest only for the
time being. I think that’s a very smart and prudent thing to do for any business at this
point where we’re not exactly sure how long our cash flows will be impacted by what’s
going on with respect to COVID-19. And it’s something that LGA has done, uh,
with its bank as well, is convert our existing notes to interest only. So please reach out,
talk to your banks and see if that’s an opportunity that exists for you. Something else that we
wanted to make sure that you’re addressing with your banks is what their intentions are
with respect to your line of credit. For those who have a working capital line of credit
at this time, more companies are going to need higher access to liquidity and not lower.
And sometimes when companies have historically not used the lines of credit during times
like these, banks will actually pull back or lower the available funds that exist within
those lines of credit. And I can tell you, uh, speaking from a prudent person’s perspective
with respect to what we’re doing, we’re actually looking for our bank to increase our working
capital line of credit to make sure that any customer payments that become delayed as a
result of everything, um, are mitigated by the fact that we have higher access to liquidity
to continue to pay our teams. So, uh, we think that it makes sense for all
of you to reach out and make sure you understand what your bank’s intending to do with respect
to your line and to the extent that you think you need additional borrowing capacity to
help get through this, um, obviously that assumes that you’re going to operate profitably
and that this is merely a solution for cashflow as opposed to profitability, then this is
something that you might want to do to make sure that you’re putting yourself in a position
to operate, um, as seamlessly as possible throughout everything that we’re going through.
So, um, the FDIC is obviously encouraging banks to work with their customers and their
clients. Uh, we’re not sure what other relief will come from the banking system, but, uh,
it doesn’t hurt to make sure you’re being proactive with your banks and having these
conversations and putting yourself in the best position possible, uh, to sort of address
some of the unknown. So, uh, we’re going to continue to keep you apprised, uh, of different
developments as they become known to us, whether it be regulatory relief, um, or anything else
that comes to our attention with respect to how it will impact your business. So stay
safe and healthy and we’ll talk to you guys soon.

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