Banks announce fresh COVID support amid lockdowns, including loan repayment deferrals

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Australia’s major banks have announced fresh support measures to help businesses and individuals affected by Sydney’s extended COVID-19 lockdown and other snap shutdowns and travel restrictions around the country.

With restrictions being tightened on what kind of shopping is considered “essential” for the purposes of leaving home, more retailers are likely to join the ranks of hospitality and personal services businesses already shut or heavily affected by the lockdown.

Even before those tightened restrictions were announced, the Australian Banking Association (ABA) said its members, including the big four banks, would offer fresh support to customers struggling under the weight of lockdown restrictions.

The ABA stressed that these measures would be available to all small business and home loan customers significantly affected by current lockdowns or recovering from recent lockdowns, regardless of where they were located and what industry they were in.

What financial support is on offer?

Small businesses — with debts under $3 million and a turnover of less than $5 million — can apply for repayment deferrals of up to three months, with the deferred period added on to the end of the loan.

The loan must not have been in arrears prior to the latest COVID impact unless the customer was already on an agreed payment program with their bank.

Small businesses could also ask for refunds of their merchant terminal fees for up to three months and a waiving of fees on cash deposit and farm management deposit accounts for the same period.

Both business and individual customers can also ask their bank for a repayment deferral on their home loan.

Unlike last year’s blanket loan deferral offer, this would be assessed on a month-by-month basis between the customer and the bank.

“Customers can rest assured that if they need help, they will get it,” said the ABA’s chief executive Anna Bligh.

“Your bank will help you find a way through, don’t tough it out on your own.

“Banks also stand ready to support larger businesses and they will be assessed on a case-by-case basis.”

How to access the bank support?

Ms Bligh said customers should act swiftly if they are struggling.

“Customers who need support should contact their bank,” she said.

The ABA represents 22 banks, including the big four, major regional and mid-sized banks, as well as foreign institutions with a banking licence in Australia.

The Commonwealth Bank’s chief executive, Matt Comyn, is currently chair of the ABA’s council.

He said CBA will be proactively contacting eligible businesses early next week to offer them a loan deferral through an online application process.

“The pandemic continues to impact businesses across Australia, with small businesses in particular facing cash flow challenges as a result of the lockdowns and restrictions on travel,” Mr Comyn observed.

“We recognise that some small businesses, like those in the tourism, hospitality and retail industries, are where the effects of lockdowns are being most acutely felt.”

Westpac chief executive Peter King said his bank was gearing up in anticipation of increasing requests for support.

“We are seeing the need for immediate support for small business owners who are experiencing challenges with reduced trade, cashflow and foot traffic as more people stay at home, particularly in areas with lockdown restrictions like Greater Sydney,” he noted.

“We have scaled up our support to reflect the longer impact of COVID-19 and have a dedicated team of bankers available to help tailor this assistance to our customers’ personal circumstances.”

What do small businesses think?

Alexi Boyd is the interim chief executive of the Council of Small Business Organisations Australia (COSBOA), a peak lobby group for the sector.

Having just discussed the latest developments with a cross-section of her membership, she welcomed the banks’ move.

“Anything anyone can offer at the moment is welcomed by small businesses,” she said.

“It’s great to see the ABA getting on the front foot.”

The New South Wales Treasurer Dominic Perrottet also welcomed the move, following on from the state government’s recently announced business support package.

Ms Boyd added that banks had been speaking to small business customers recently to get a sense of how they were being affected, and that appeared to show in the assistance announcement.

However, she said banks still have some work to do in communicating what is on offer to many of their customers.

“There’s a fear factor that if you default on your repayments it may affect your credit history, even when that’s not the case.

“So it’s important that banks offer clear and accurate information.”

Ms Boyd said small business owners should also strongly consider getting independent financial advice on how any deferral and extension of their loan might affect their operations and plans, especially through increased future interest costs.

She would like to see the National Cabinet also get on the front foot by agreeing on national standards for lockdowns and border closures so that businesses would have more certainty about what is likely to happen and be able to plan for it.

“It’s nothing short of devastating,” Ms Boyd said of the current Sydney lockdown.

“We need to be guided by the medical experts, but small business bears the cost, both financial and mental health.”

By business reporter Michael Janda (Original ABC Article)