Setting aside, if one has the luxury, the wave of personal
tragedy resulting from the global spread of COVID-19, there is no
doubt that important measures for the public good to contain and
slow the epidemic will have an acute and significant economic
impact. Few businesses, big or small, will be immune from demand
shocks, disruption to supply chains, labor shortages or all three.
The resulting impact on their cash flow could potentially cause
irreparable and unnecessary damage to firms with otherwise
perfectly viable longer term prospects. Responsible lenders that
value client relationships and that want to avoid the domino effect
of multiple defaults will need to engage constructively with
borrowers to nurse them through impending liquidity crises. Banks
will also need to act fast and in a concerted manner.
