Answer:
It sounds as though you may be violating your own policy if it requires annual financials. If you haven't set this as a condition of credit in your loan agreement, you may have to wait until the lines come up for renewal and impose this condition at that time. Otherwise, you are free to request it, but you don't have any rights to demand it. Also, what if you don't like the financials? Setting limits or getting them a few months prior to a renewal date will also be required. It will be of little use to get the financials now with no capability of acting on them. You could use any now as an early warning for a problem credit and reserve for those accounts. If you have required these in your loan agreements but never enforced the requirement, you are still violating your own policy. I believe you can request them without any grace period for compliance. Simply indicate that they agreed to these terms when they accepted the credit facility. Certainly you should provide them with the form or guidance on what is acceptable and give some time for them to provide this. Accountants will be very busy in the coming months, so demands may not be a good idea if these borrowers use accountants for such information.
First published on BankersOnline.com 4/06/09
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