The new Banking Code of Practice, that came into effect on 1 July 2019, covers small businesses for the first time.
As a small business owner, you can expect:
- Simplified loan contracts with fewer conditions for total loans under $3 million.
- Longer notice periods for when loan conditions change.
- Improved communication and greater transparency when using valuers and insolvency practitioners.
The new Code is a set of enforceable standards that customers, small businesses, and their guarantors can expect from Australian banks.
Small business owners will need to stay on their toes, though. While all the retail banks have signed up, only some of the 100+ institutions that provide small business services have signed up to the Code. As at mid-August 2019, none of the online-only lenders has signed up.
The Australian Securities and Investments Commission will monitor what happens with small business and publish its findings every six months.
Learn more about the Code and how it might affect your business by visiting the Australian Banking Association website.
Before taking out any loan we urge you to consider these 10 key things to ask first.