Australian Banking Association CEO, Anna Bligh has announced that due to the deepening crisis, as more businesses are affected, they have built on the Small Business Relief package to ensure more businesses are given assistance through the coronavirus pandemic. Banks have developed this relief package following discussions with APRA and ASIC to provide the appropriate regulatory treatment.
“When combined with the previous small business assistance announced just over a week ago, this means $250 billion worth of loans covered are able to access a six month deferral of payments, which means dollars staying in the pockets of businesses throughout this crisis,” Ms Bligh said.
Australia’s banks will extend the six-month deferral of loans, to 30,000 more businesses across the country, extending their support to 98% of all business with a loan from an Australian Bank.
HOW THE NEW MEASURES WORK
Businesses with total business loan facilities of up to $10 million (increased from $3 million) will be able to defer business loan repayments for six months.
This will free up extra money available to 425,000 businesses to cope with during this crisis. Banks have also agreed to not enforce business loans for non-financial breaches of the loan contract.
Businesses with total loans of more than $10 million may also be eligible for relief, but this will need to be considered on a case by case basis.
HOW THESE MEASURES WILL APPLY :
All sectors of the economy will benefit, and on an opt-in basis, under the conditions that:
- Commercial property landlords will be asked to provide an undertaking to the bank that for the period of the interest capitalisation, they will not terminate leases or evict current tenants for rent arrears as a result of COVID19;
- The customer has advised that its business is affected by COVID-19;
- The customer was current in terms of existing facilities 90 days prior to applying; and
- Interest is capitalised – meaning either the term of the loan is extended or payments are increased after the deferral period.
This measure is announced subject to authorisation from the ACCC. For further information please click here.
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