Australia’s biggest banks have expanded their support for customers impacted by the coronavirus with a slew of new measures to fight off recession.
The Australian Banking Association (ABA) has announced that businesses with loan facilities of up to $10 million will now be able to defer payments for business loans for six months, increasing the ceiling from $3 million.
“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,” said ABA CEO Anna Bligh.
CBA will support the package, providing repayment relief of up to $3.6 billion for business customers impacted by coronavirus, delivering around $600 million back into business cash flows each month. More than 99 per cent of CBA’s business customers are now eligible for loan repayment deferrals.
“The economic, physical and personal impact of the coronavirus will be severe,” said CEO Matt Comyn.
“We are dealing with a health crisis which is precipitating a significant economic shock, and the most vulnerable in our community are especially in need of our collective support.”
Westpac is also offering “immediate and practical assistance” in the form of repayment relief for businesses with a total lending exposure up to $10 million and unsecured three-year term loans of up to $250,000 for new and existing business customers with turnover of less than $50 million.
“These are unprecedented times and they call for strong, meaningful actions,” said Westpac chief executive for business Guil Lima.
“With this extension we are now able to offer access to these support measures to 98 per cent of Westpac’s business bank customers if they have been impacted by COVID-19.”
The measures join a number already announced by the Australian Banking Association, including a six-month loan repayment deferral meant to give small business “multibillion-dollar shot in the arm”.
But customers have been slow to take advantage of some of those measures.
“A lot of our customers are still shell-shocked,” ANZ CEO Shayne Elliott told media and business leaders.
“They’re working through their own crisis in terms of what needs to be done. We’ve got about 130,000 small businesses that we deal with. We’ve had a little bit less than 10 per cent reach out asking for assistance in terms of payment holidays… it is going to take time for people to digest what options are available to them, and what needs to be done.”
Mr Elliott said that ANZ was approaching the problem as though they were fighting a virus by trying to limit its spread through the economy.
“The right response is isolation,” Mr Elliott said.
“What we need to do is isolate the spread so that a problem in retail isn’t going to infect landlords and keep going. The way to isolate is exactly what the government has been doing and what the banks have been doing.”
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