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Banks announce "deferral" of loan repayments for up to 6 months

Banks defer small business loan repayments for 6 months

Australia's banks have announced that small businesses who are affected by COVID-19 will be eligible to have their loan repayments (principal & interest and interest only) "deferred" for six months, starting Monday 23 March 2020.  At the end of the deferral period, small businesses are not required to pay any lump sum as a catch-up payment; it is a clear six month deferral.

We note that a "small business entity" is one which carries on a business with less than $10 million aggregated turnover, and can be an individual, partnership, company or trust that runs the business.

According to Australian Banking Association (ABA), this concession will be adopted by all Australian banks.  The ABA confirmed that banks are putting in place a fast-tracked approval process, to ensure customers receive support as soon as possible.

 The deferral option is available to any small business regardless of industry.  Any small businesses who have not already been contacted by their bank should contact their bank to apply.

Banks have also announced various concessions for home loan customers

It is important to note that each Bank has announced different measures to support their customers whose job or earning capacity has been impacted as a result of COVID-19.

Some home loan customers experiencing financial hardship will be able to pause their home loan repayments for periods ranging from three or up to six months.

Some banks have announced they will reduce loan repayments to the minimum required under their loan contracts from 1 May.

As each bank has announced different details, we recommend you contact your bank and enquire what your options are.