Small businesses devastated by the coronavirus crisis may not have to repay their loans for the next six months.
The CEO of the Australian Banking Association (ABA) Anna Bligh announced today a new scheme for small business owners struggling to stay open amid the current COVID-19 crisis.
According to Ms Bligh “small businesses will be able to defer loan repayments for six months”
“Small business can rest assured that if they need help they will get it,” she said.
“Banks will make sure this deferral available to any small business that is struggling through this crisis, but business owners will need to approach their banks, as the banks will not be reaching out directly to their customers”
Ms Bligh said the banks were yet to see households going into mortgage stress as a result of COVID-19 but would reassess their approach if the situation changed.
“If we start to see any other critical need … that’s something that we will need to look at,” she said.
She said the pandemic was causing “devastating effects across the economy” but that small business was being particularly hard hit.
Banks are now working on the details of the small business package and could start rolling it out as early as Monday.
“Businesses are doing it very tough … but rest assured, banks have got your back,” Ms Bligh said.
“This package is for small businesses which today have the most urgent and critical need.”
It’s estimated that Small businesses employ around five million Australians.
Ms Bligh said the banks had been in discussions with Treasurer Josh Frydenberg and regulators ahead of today’s announcement.
“We are now in extraordinary and very difficult times,” she said.
“This is a moment when the country needs to see all of its institutions working together cooperatively and in the national interest.”
Soon after the announcement, NAB said home loan customers could pause repayments for up to six months. The bank has also cut its fixed-rate home loans by 60 basis points.
It comes after the Reserve Bank cut interest rates to a record low 0.25 per cent on Thursday and announced extraordinary measures to help prevent a coronavirus-driven recession.
Businesses impacted by COVID-19 need to register with their banks directly.