Banks will offer small businesses a six-month deferral on their business loan repayments as part of the finance sectors response to Covid-19.
Australian Banking Association CEO Anna Bligh said the move will “deliver up to $8 billion back into the pockets of small businesses” across more than $100 billion worth of business loans
Bligh said all small businesses impacted by Covid-19 will be entitled to the deferral of payments for six months on all loans associated with their business.
“All those businesses will have to do is to register their need with their bank,” she said.
“Banks are not going to wait for businesses to come to them — they are, right now, out in the field, talking to their business customers, putting things out through their customer channels, and telling customers how they can reach their bank to access this deferral of payments.”
At present, the loan deferrals only apply to small business, with Bligh saying the banks are not looking to apply relief to home loans at this time.
“Banks have today made a very important decision to help those in critical need – and that is small businesses –if we see that need in other areas, such as mortgages they may look to that too.”
Bligh acknowledged the situation is evolving.
“As we see trends in other parts of banking, we will do what we can to respond,” she said.
“Getting through this will require a great deal of cooperation between banks and government and regulators.”
Banks will be looking to work with any business in the small to medium category.
“We won’t look to draw arbitrary lines to define them – this is about getting relief as quickly as possible to the hands of businesses,” she said.
Bligh said Australia has one of the most strong and stable banking systems in the world
“We are better capitalised than ever. Banks stand ready, open for business and ready to lend. We have 10 years of work to increase our capital buffer – we do this to have the funds there when needed. Australian banks big and small are equipped to deal with this crisis,” she said.
“We are now in extraordinary and very difficult times. We need to see all institutions working together and cooperatively. We have stood side by side to make sure we can all offer same access to support for customers, no matter who they bank with.”
“We know many of our members have business loans in addition to other forms of funding. This will help them and many small businesses across the sector shore up their cash flow during this crisis,” she said.
“Many fintechs also service the broader SME market, so their continuity is tied to the health of this sector.”
- Additional reporting by Simon Thomsen