There are now less than six months to go until the end of 2021, which means that time is running out for businesses to prepare for sterling LIBOR ending in its current form. While banks and lenders have been making preparations for some time, the market is now in a critical period in which all borrowers need to understand how this affects them and what they may need to do to be ready. For many businesses the transition may come earlier.

Given the number of LIBOR-linked contracts remaining, it is key to ensure there is enough time and resources to transition smoothly. The national working group, supported by the UK regulators, has made clear that where possible all LIBOR-linked contracts should have been actively moved away from LIBOR by the end of September of this year. This could mean changing the contract to reference a different rate or adding in an agreement for it to change at a specific date in the future.

That is now only three months away. While the approach to transition may differ according to individual contracts, there is one thing that can generally be expected for all impacted borrowers. Banks and lenders will be increasing communication with customers to engage with them on any actions required.

In the next few months, it is important that borrowers seek and familiarise themselves with the information needed to help them prepare and respond to the change. They should review their LIBOR exposure, assess the different rates and impact of a contract change on their business and make a plan of action.

UK Finance has developed a new LIBOR Transition SME Resource on its web site which addresses the most frequently asked questions, signposts businesses to all the other key information available and hopefully provides a useful place for any clarity needed on the LIBOR transition.

The clock is well and truly ticking with the move away from LIBOR to more robust alternative rates in its final stages. If you are still unsure of the first steps to take, speak to your advisers or your lender. In order to be ready for a world without LIBOR, the time to act is now.

For additional information, read UK Finance's Discontinuation of LIBOR - Guide for Business Customers.