Last updated: 30 March 2020
If you have an existing small business loan from your bank and your business has been disrupted as a result of coronavirus, a Small Business Relief Package announced by the Australian Banking Association (ABA) could help.
Loan deferrals announcement
Please note: The ABA has announced that a deferral extension of up to four months (on top of the existing six month period) will be available to eligible customers. This extension will not be automatically applied if you have a deferral in place.
On 20 March 2020, the ABA announced that Australian banks will defer loan repayments for small businesses affected by COVID-19 for six months. The assistance package will apply to more than $100bn of existing small business loans.
On 30 March, they announced that the threshold for total business loan facilities that could be deferred would be raised from $3 million to up to $10 million. The Small Business Relief Package will apply to more than $250 billion of existing business loans and cover 98 per cent of all businesses with a loan from an Australian bank.
The expansion of loan deferral thresholds means that borrowers such as commercial landlords of properties can access financial support, provided they agree not to terminate leases or evict current tenants for rent arrears due to COVID-19.
During this period banks have also agreed to not enforce business loans for non-financial breaches of the loan contract (such as changes in valuations of businesses).
The new measures will apply in all sectors of the economy on an opt-in basis, under the following conditions:
- the borrower must advise their bank that their business is affected by COVID-19
- the borrower was current in terms of existing facilities 90 days prior to applying for support
- commercial property landlords applying for support must not terminate leases or evict current tenants for rent arrears as a result of COVID-19, during the six-month repayment deferral period.
- interest is capitalised, meaning that either the term of the loan is extended or payments are increased after the deferral period.
Businesses with total loans of more than $10 million may also be eligible for relief but will need to be considered on an individual basis.
The expanded Small Business Relief Package is subject to authorisation by the Australian Competition and Consumer Commission (ACCC).
If you have personal loans or mortgages from which you are seeking relief, in the first instance contact your bank or financial institution’s financial hardship team. A list of these contacts is available on the Australian Banking Association website.
In addition to the banking relief package, the Australian Government has already announced a targeted stimulus packages for business and the Western Australian Government announced measures to support small business during the coronavirus (COVID-19) pandemic.