Coronavirus and bank assistance

Deferring small business loan repayments

Small businesses with total business loan facilities of up to $10 million will be allowed to defer loan repayments for six months under emergency measures announced by the Australian Banking Association (ABA).

The opt-in measure will see the banks apply certain conditions on customers, including requiring customers to advise that their business is affected by the coronavirus.

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 the coronavirus.

Interest will be capitalised, meaning either the term of the loan is extended, or payments are increased after the deferral period.

 

Deferring loans as a commercial landlord

For commercial property landlords, you will need to provide an undertaking to the bank that for the period of the interest capitalisation, you will not terminate leases or evict current tenants for rent arrears as a result of the coronavirus.

The government’s recommendation is that landlords, tenants and their banks ‘sit down’ and talk to each other about suitable arrangements during this period.

Any changes to current arrangements to deal with payment of rent, rent abatement or any other form of relief, should be documented by a written variation to the lease terms.

 

Further assistance from the major banks

The major banks have released assistance packages for those currently experiencing hardship. Below we cover packages announced by CBA, ANZ, NAB, Westpac, Bank of Queensland and Suncorp. If we haven’t mentioned your bank, we encourage you to contact them to find out how they can help. We will continue to update this article and publish relevant content as announcements are made. You might also find our article on Government Assistance helpful.

 

CBA

Personal

Home loan customers requesting financial assistance during this time will be able to defer their repayments, with interest capitalised, for up to six months.  For the duration of the support period no repayments are required.  However, during this time, interest and charges will add to the loan balance.  At the end of the support period, your loan balance will be recalculated (to include interest and charges added to the balance during the support period) and your loan term will be extended so that your repayments stay the same as they were prior to the commencement of the deferral.  You can organise to defer your repayments through your NetBank account.

Business

1. Deferring all principal and interest repayments on BetterBusiness Loans and Asset Finance loans under $5 million for up to 6 months. This 6-month period includes:
   • An automatic deferral for 3 months for all CommBank customers.
   • After the first three months, eligible customers will be able to opt-in for a further three months.
2. Deferring all principal and interest repayments on business loans between $5 million and $10 million for up to 6 months in line with the above mentioned ABA loan deferral arrangements.
3. Reducing small business loans by 1% across all business loans where the variable rate is calculated based on the current cash rate. This will come into effect from 3 April 2020.
4. Deferring repayments on overdraft products, for 90 days.
5. Waiving merchant terminal fees for impacted customers with CommBank merchant terminals for 90 days.
6. Waiving early redraw fees on business term deposit accounts (including Farm Management Deposit accounts).
7. Waiving establishment fees and excess interest on Temporary Excess products.
8. Under the Federal Government’s Coronavirus SME Guarantee Scheme, unsecured loans of up to $250,000 (lending criteria applies) with no establishment or account fees will be made available for businesses with less than $50 million annual turnover.  These loans are for working capital purposes only and not for purchases or refinancing existing debt. Further details on these loans and how to apply can be found here.

 

ANZ

Personal

For existing Variable Home Loan customers, ANZ is decreasing the standard variable home loan rate by 0.15% p.a. effective Friday 27 March 2020. If you are currently paying more than the minimum repayment amount, you have the option to reduce your repayments to the minimum repayment amount. If you’d like to change your repayment amount, you can do so after 27 March 2020 on ANZ Internet Banking (instructions available here) or by contacting ANZ.

If you’re experiencing financial difficulty due to coronavirus, ANZ may be able to support you by putting your home loan repayments on hold for six months, with interest capitalised.  If you pause your repayments, ANZ will check in with you after three months. You can request a deferral here.

Business

If your business has been affected by the financial impacts of coronavirus, ANZ is offering the following financial support:

1. All impacted customers can request a six-month payment deferral on loan repayments for term loans, with interest capitalised.
2. Temporary increases in existing overdraft facilities for 12 months.
3. Decreasing variable interest small business loan rates in Australia by 0.25% p.a., effective from 27 March 2020.
4. Under the Federal Government’s Coronavirus SME Guarantee Scheme, unsecured loans of up to $250,000 (lending criteria applies) with no establishment or account fees will be made available for businesses with less than $50 million annual turnover.  These loans are for working capital purposes only and not for purchases or refinancing existing debt. Further details on these loans and how to apply can be found here.

To access this support you can talk to your business Relationship Manager or, if you don’t have one, you can request a call back from a business banker.

 

NAB

Personal

Eligible customers can access a home loan repayment pause for up to 6 months (including a 3-month checkpoint). This applies to all NAB home loan customers affected by coronavirus (owner occupiers and investors). The ability to redraw will be revoked during this repayment pause therefore you need to consider whether taking a redraw is a more suitable option.

To access this assistance you’ll need to speak to your banker or you can submit this online form for a call back.

Business

1. A deferral of business loan repayments for up to six months, including floating and variable rates and equipment finance loans.
2. Automatically receive an additional 100-basis point reduction on variable rates for small business options loans from Monday 30 March 2020. This is on top of a 25-basis point reduction earlier in March.
3. Pause business credit card repayments for up to 6 months (including a 3-month checkpoint).
4. Under the Federal Government’s Coronavirus SME Guarantee Scheme, unsecured loans of up to $250,000 (lending criteria applies) with no establishment or account fees will be made available for businesses with less than $50 million annual turnover.  These loans are for working capital purposes only and not for purchases or refinancing existing debt. Further details on these loans and how to apply can be found here.

If you require hardship assistance, you can submit a request for support online. Alternatively, NAB’s Business Customer Care team is available on 1300 961 577.

 

Westpac

Personal

Westpac is offering reduced fixed home loan rates for owner occupiers of 2.29% p.a. available for one, two and three years. These will be effective from Friday 27 March 2020.

Home loan customers can also access repayment relief if they have lost their job or suffered loss of income as a result of coronavirus. A three-month deferral is available with the possibility of an extension for a further three months after review. You can apply for the deferral here.

Westpac is also offering a special offer on term deposits of 1.7% p.a. interest for 12 months (up to $500,000 per customer).  For Australians aged 65 years and over, the rate will be 2% p.a. for eight months (again, up to $500,000 per customer).  This will be available from Friday 27 March 2020.

Business

1. 400 basis point reduction on unsecured lending term loan for new and existing customers, effective Monday 23 March 2020.
2. 200 basis point reduction on overdrafts for new and existing customers, effective Monday 6 April 2020.
3. 100 basis point interest rate reduction for small business cash-based loans, effective Monday 6 April 2020.
4. Small business customers are able to defer principal and interest repayments of business term loans for up to six months. Find out how to apply here.
5. Merchant terminal rental fee waivers for up to three months.
6. Under the Federal Government’s Coronavirus SME Guarantee Scheme, unsecured loans of up to $250,000 (lending criteria applies) with no establishment or account fees will be made available for businesses with less than $50 million annual turnover.  These loans are for working capital purposes only and not for purchases or refinancing existing debt. Further details on these loans and how to apply can be found here.

 

Bank of Queensland

Personal

To help support personal customers experiencing difficulty in the current environment, you can opt to either defer your mortgage repayments or switch to Interest Only repayments for an initial period of three months. At the end of this period, BOQ will contact you to assess if further assistance is required.

Business

As part of the ABA’s above mentioned industry-wide small business response, BOQ has a new Business Banking Relief Package available to small business customers. This package offers small business customers a deferred repayment period of up to six months on small business loans.

Both

• The option to make Interest Only repayments.
• Special arrangements in relation to arrears.
• Early access to Term Deposit funds with waiver of redemption fees.
• Waiver of other fees and charges related to non-payment.

You can apply for assistance using Bank of Queensland’s online application.

 

Suncorp

Personal

1. Temporarily postponing loan repayments
2. Extending the period of loan contracts and postponing or reducing the amount of repayments
3. Offering short-term solutions to your banking needs, including waiving early withdrawal fees if you wish to withdraw from a term deposit.

If you’re facing financial hardship, you can submit a financial assistance request form.

Business

1. A six-month deferral of principal and interest repayments (interest will be capitalised) for eligible small business customers impacted by coronavirus and/or an extension of your loan contract and reduction of repayments.
2. Interest only loan terms for up to 12 months.
3. Waiving of term deposit interest adjustments (break fees) to access deposit funds prior to maturity.

To apply, you can submit a financial assistance request form. You will need to provide your most current statement of assets and liabilities and can appoint an agent (such as your accountant) to handle the request for you.

 

Further help

We will continue to provide details on bank assistance as soon as the information is available. Should you have any questions about how you or your business can access this assistance, please contact us for further advice. You can reach us on (07) 3023 4800 or at mail@marshpartners.com.au.

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