31 March 2020 3:50pm
The ABA has announced a number of relief packages for small businesses suffering due to the economic and social impacts caused by the coronavirus pandemic.
Read our latest updates here.
As the physical distancing measures that the government has implemented in response to the coronavirus (COVID-19) have become increasingly restrictive, the ABA has announced that the SME banking relief package will be further extended. Through broadening the criteria by which businesses will be eligible under the scheme it is expected that 98 percent of all businesses with an Australian bank loan will be able to seek a 6 month deferral of loan repayments.
As a result of the expansion of the scheme, there are a greater range of businesses that qualify. As this is being applied on an opt-in basis it will be important for SMEs to take advice on the suitability of the scheme for your business on a timely basis – and then contact your lender should you wish to access the scheme.
It is important to remember that interest continues to be accrued and capitalised to your loan balance.
There are a number of criteria that need to be met in order to access the scheme, including:
We believe that this is a sensible extension of the scheme and acknowledge that the number and range of businesses that will need this relief continues to increase, including commercial landlords of properties which have tenants that don’t have the ability to meet rent commitments. It is important to be aware of the eligibility criteria and in particular the need to be up to date with loan commitments for the previous 90 days. This will make it critical for you to work with your advisors to access the scheme on a timely basis.
While some Australian industry sectors are experiencing a surge in activity during the coronavirus (COIVD-19) impacts on our economy, a vast majority are facing a rapid evaporation of their cash reserves – none more so than local small businesses like yours.
In the face of such enormous disruption, our banks, the Australian Banking Association, regulators, the RBA and the government have come together to develop a relief package aimed at protecting the cash flows of small businesses to enable them to stay in business and continue employing the five million Australians that work for them.
We suggest that you should seek help and advice from your banking advisors on how to access the benefits of these packages. You will need to consider the specific terms of the benefits and take steps to position yourself and your business to be able to obtain maximum support on offer (eg setting up digital banking if you do not have it already). Communicating with your bank is critical at this point, and they will be able to help you build these benefits into your short term cash flow forecasts.
We here at KPMG Australia recognise the critical role that you and your small business plays in the community and in providing employment for millions of Australians. It is clear that this sector is vulnerable to the impact of the coronavirus pandemic and we strongly support any initiatives provided to assist you and your business in maintaining cash. There is no doubt that nimble, innovative and targeted responses will be vital to managing the challenges you may be experiencing. Critical to successfully doing so will be all stakeholders – government, RBA, regulators and the private sector – working together. Now is the time for a united and community-focused response.
Information accurate at the date and time published.
Small businesses are the most vulnerable part of the economy and have the most urgent need for assistance.
If you have any questions regarding the content of this article and would like speak to someone from our team please contact us.