For a Small Business, Even a Temporary Suspension of Operations Can Mean Losing a Significant Share of Revenue

The greatest risk of loans becoming non-performing is associated with enterprises whose operations directly depend on uninterrupted electricity supply, stable logistics, and the preservation of production facilities.

This was reported by Olena Yermolova, Risk Management Director and Member of the Management Board of GLOBUS BANK.

These include primarily industrial enterprises, the agricultural sector, transport and logistics companies, as well as small and medium-sized businesses that lack sufficient financial reserves to recover quickly after attacks.

Large companies generally have more opportunities to redistribute production, attract additional financing, and build up reserves. By contrast, even a temporary suspension of operations can mean losing a significant share of revenue for a small business.

For individuals, the main risks remain job loss, reduced earnings, forced displacement, and damage to housing.

Olena Yermolova noted that, during wartime, borrower assessment has long gone beyond the traditional analysis of financial statements.

The location of production facilities, dependence on electricity supply, availability of alternative logistics routes, backup power sources, insurance coverage, and the ability to quickly resume operations have become increasingly important.

At the same time, banks assess a company's liquidity reserves, debt burden, stability of orders, and ability to meet its obligations even under adverse circumstances.

If a company has suffered damage from an attack, loan restructuring may be one way to address the problem. Depending on the specific circumstances, a bank may offer a deferral of certain payments, adjustments to the repayment schedule, an extension of the loan term, or consider providing additional financing.

“For a bank, it is important to retain a “viable” borrower. If a company has orders, production potential, and a realistic recovery plan, temporarily adjusting loan terms may be far more effective than formally classifying the debt as non-performing. However, each such decision requires careful assessment, as restructuring should help a business recover rather than merely postpone the problem”, — the banker emphasized.