Australia’s major banks have announced new support measures to help businesses and individuals affected by Sydney’s expanded COVID-19 isolation and other sudden stops and travel restrictions across the country.
- 22 members of the Australian Banking Association are offering new COVID support to small businesses and mortgage clients.
- Small businesses can apply for a three month grace period, mortgage clients can request a monthly grace period.
- Business groups welcomed the move, but caution participants to seek advice if they are considering deferring and extending their loans.
With tightening restrictions on what types of shopping are considered “necessary” to get out of the house, more retailers are likely to join the ranks of hospitality and personal services businesses already closed or badly affected by the lockdown.
Even before these tightened restrictions were announced, the Australian Banking Association (ABA) said its members, including the Big Four banks, will offer new support to customers suffering from lockdown restrictions.
The ABA stressed that these measures will be available to all small business and home loan clients who are severely affected by current locks or who are recovering from recent locks, regardless of where they are or what industry they operate in.
What financial support is offered?
Small businesses – with debts of up to $ 3 million and a turnover of less than $ 5 million – can apply for a grace period of up to three months, with a grace period added at the end of the loan.
The loan must not be overdue until the last exposure to COVID, unless the customer has already participated in an agreed payment program with their bank.
Small businesses can also claim reimbursement of their terminal fees for up to three months and the waiver of cash and farm management deposit fees for the same period.
Both business clients and individual clients can also ask their bank for an extension of their home loan repayment.
Unlike last year’s proposal to defer a blanket loan, this will be assessed monthly between the client and the bank.
“Customers can rest assured that if they need help, they will get it,” said ABA CEO Anna Bligh.
“Banks are also ready to support larger enterprises and their assessment will be assessed on an individual basis.”
How to get access to bank support?
Ms Bly said that buyers need to act quickly if they have problems.
“Customers who need support should contact their bank,” she said.
ABA represents 22 banks, including the Big Four, large regional and mid-sized banks, and foreign institutions with a banking license in Australia.
Commonwealth Bank CEO Matt Comyn is currently the chairman of the ABA board.
He said the CBA will proactively contact relevant businesses early next week to offer them loan deferral through the online application process.
“The pandemic continues to affect businesses across Australia, with small businesses in particular facing cash flow problems as a result of blockages and travel restrictions,” Comin said.
Westpac CEO Peter King said his bank is gearing up for more support requests.
“We see the need for immediate support for small business owners who face the challenges of reduced trade, cash flow and pedestrian flows as more people stay at home, especially in restricted areas such as Greater Sydney,” he said. …
“We have scaled up our support to reflect the longer impact of COVID-19, and we have a dedicated team of bankers to help tailor this assistance to our clients’ personal circumstances.”
What do small businesses think?
Alexi Boyd is interim executive director of the Council of Small Business Organizations of Australia (COSBOA), the sector’s leading lobby group.
Having just discussed the latest developments with some of its members, she welcomed the banks’ move.
“Anything anyone has to offer at the moment is welcomed by small businesses,” she said.
“It’s great to see ABA come to the fore.”
New South Wales Treasurer Dominique Perrotte also welcomed the move, following state government recently announced business support package…
Ms Boyd added that the banks recently spoke with small business clients to understand how they were hit, and this appeared to be reflected in the bailout announcement.
However, she said banks still have work to do to convey to their customers what is on offer.
“Therefore, it is important that banks provide clear and accurate information.”
Ms Boyd said small business owners should also seriously consider seeking independent financial advice on how loan deferral and renewal might affect their operations and plans, especially due to increased future interest costs.
She would like to see the National Cabinet also come to the fore, agreeing on national standards for blocking and closing borders, so that businesses have more confidence in what might happen and so they can plan for it.
“This is nothing short of devastating,” Ms. Boyd said of the current isolation in Sydney.
“We need to be guided by medical experts, but small businesses are responsible for both financial and mental health.”