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A suitable answer to the difficult questions

It may happen that due to disappointing business results, your lender starts asking questions. For you as a business owner, these questions can be very intimidating. You feel that the chance of giving a wrong answer is very high. Florijnz speaks the language of the lender, so together we can formulate what you want to say. So you still achieve your goal, without scaring off the lender.

How your lender looks at the situation

We recently helped a company with questions from the bank regarding the Interest Coverage Ratio. The Interest Coverage Ratio, or interest coverage ratio, indicates how many times a company earns its interest charges. It is therefore a measure to see to what extent earnings before interest and tax can fall without the company running into financial difficulties.

How Florijnz turns a half empty glass into a half full one

For our client, the bank requested an Interest Coverage Ratio (ICR) of 5. We advised our client that an ICR of 5 in combination with a solvency ratio of 40% is very high. Normally, the ICR is a maximum of 4. On behalf of the client, we also checked the definition of the ICR of the bank in question. It appeared that certain transaction costs are added to the interest costs, making the ICR is not achieved. Florijnz has the costs allocated in the right way, so the customer had a good feeling in conversation with the bank.

Florijnz has written an advice how the entrepreneur could respond to the questions of the lender. This has ensured that our client could continue with his passion without problems.

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Stef Kolen
Stef KolenCorporate Finance Advisor

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