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Up to 98 per cent of all businesses will now be able to defer loan repayments for six months following an extension of loan facilities of up to $10 million.
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Banks extend repayment deferral to $10m loans
30 March 2020
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9 minute read
The Australian Banking Association has now extended its emergency support measures to 30,000 more businesses up by allowing businesses with total business loan facilities of up to $10 million to defer repayments for six months.
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The previous measure had only applied to small businesses with less than $3 million in loans.
The ABA has estimated that up to $250 billion worth of loans will come under the extended measure.
The opt-in measure will see the banks apply certain conditions on customers, including requiring customers to advise that their business is affected by COVID-19.
For commercial property landlords, they will need 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 COVID-19.
Business are also required to have been current in terms of existing facilities 90 days prior to applying.
Interest will be capitalised, meaning either the term of the loan is extended or payments are increased after the deferral period.
“The type of businesses this applies to includes commercial landlords of properties such as local shopping centres, pubs, clubs and restaurants, who must agree not to terminate leases or evict current tenants for rent arrears due to COVID-19 in order to access support,” said ABA chief executive Anna Bligh.
“This will help protect many more thousands of small businesses from being evicted if they are struggling to pay the rent as it covers approximately 90 per cent of commercial property owners who have loans with an Australian bank.
“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.”
Businesses with total loans of more than $10 million may also be eligible for relief, but they will need to be considered on a case-by-case basis, Ms Bligh said.
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