The decision will mean about 98 per cent of all businesses with a loan from an Australian bank will have the option to defer payments.
The latest decision is aimed at the property sector and the banks have said property owners will have to provide an undertaking to the bank that for the period of the deferral, they will not terminate leases or evict current tenants for rent arrears as a result of COVID-19.
Under the new policy, businesses with total loan facilities of up to $10 million, up from the $3 million small business threshold, would be able to defer repayments for loans for six months.
The Australian Banking Association said the extension would give access to the loan deferrals to much larger companies and apply to an additional $100 billion of business loans.
Combined with measures already announced, it will mean a six-month deferral of loan payments will apply to up to $250 billion worth of loans, with extra cash available to 425,000 businesses to cope with the crisis during the COVID-19 pandemic. But the banks have included some conditions.
Among them is that the interest on the loans will be capitalised, meaning the term of the loan is extended or payments would be increased after the deferral period. The loan customer also has to have been up to date in its existing facilities 90 days before applying.
ABA chief executive Anna Bligh said the type of businesses this applies to included commercial landlords of properties such as local shopping centres, pubs, clubs and restaurants, who must agree not to terminate leases or evict current tenants for rent arrears due to COVID-19 in order to access support.
“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,” Bligh said.
“Where landlords within this threshold do the right thing by their tenants, banks will do the right thing by them. “When combined with the previous smallJump to next article