Ranking Agreement

Agreeing lending with alternative lenders

We are committed to serving our customers’ needs and recognise that small and medium sized enterprises (SMEs) should have access to different sources of finance. We will provide prompt support for business customers where they wish to take finance from more than one provider and security is involved and support the arrangements detailed in the British Bankers Association factsheet ‘What you need to know as a small or medium sized business and what the major banks are committed to’.

The following information is for Finance Providers who are proposing to provide lending facilities to SMEs who have borrowing with us and where a ranking agreement is required.

Customers who wish to discuss existing or new borrowing with us or an alternate finance provider should contact their Business Management Team in the first instance or contact us on 0345 300 0268.

What we are committed to do

We are committed to making sure the process of responding to a request for a ranking agreement is handled as quickly and efficiently as possible, and that customers are given a response as quickly as possible as regards the agreement to proceed with the request or otherwise.

We are committed to lending responsibly and any proposed changes to the structure of the borrowing of the business is subject to usual credit and affordability checks. We will always therefore, discuss the proposed arrangements with our customer.

On receipt of a standard request for a ranking agreement (based on pre-agreed or the standard templates), and provided all relevant information has been provided to enable us to make the credit assessment, we commit to undertake the following actions:

i) Notify the customer of our decision within 7 working days.

The decision will either:

a. Confirm granting of the request or

b. If unable to comply with the request will clearly state the reasons why we are not able to comply and allow the customer to follow usual lending appeals procedures if not satisfied or

c. Be clear if more time is required to complete the review and why that is.

(Note: More time is likely to be required for the reasons stated below. In such circumstances, we will advise the customer and alternate lender that the transaction will take longer to process but will seek to notify the decision within 20 working days. In the event that the alternate lender is not willing to agree to use the standard documentation, we will also advise the customer and engage in negotiations with alternate lenders to agree a bespoke document).

ii) Subsequent to the decision being made, where the decision confirms granting of the request, then following the communication of that decision, final documentation will be issued for all parties to sign.

Use of standard templates

The standard templates provided are for use for Commercial Banking and Business Banking customers and relate to charges over commercial assets only. If the mortgage is a residential mortgage, or if the mortgagee’s address as shown at Land Registry is Barnett Way, please contact the appropriate office.

The standard templates aim to cover the majority of lending scenarios. Please contact us at BoSRAenquiries@lloydsbanking.com if you have any queries relating to these.

We will be happy to discuss any additional scenarios. If you have any queries regarding specific customer cases or have an alternative wording that you would like to use, our relationship teams will be pleased to help in the first instance (subject to customer consent). We will aim to process all requests as quickly as possible although non standard wording may require further discussion and therefore may take longer than 7 days to provide a decision.

What are the main reasons a Ranking Agreement may take longer to put in place?

There may be practical reasons, for example:

Where we have not been able to contact the customer or where the customer needs time to prepare information or expresses concern;

The documentation proposed is not standard and/ or incomplete;

The business structure is complex, for example, its lending has several facilities that need to be taken into account or if a revaluation is required;

The paperwork needed from the alternate lender is incomplete;

More complex facilities, asset structures or company structures where bespoke documentation will be required and where other lenders are unable to agree standard documentation with us.

What happens if a Ranking Agreement is not granted?

In the event that a request is not granted, the decision may be because of one or more or the following (but not exclusive) reasons:

Insufficient security remains in respect of the facilities provided by Bank of Scotland;

The proposed transaction would break an existing covenant and have significant implications for the customer.

Reasons for decline will be fully explained to our customer and if they wish to challenge this, they can appeal through our standard lending appeals procedure.