FURTHER BANK SUPPORT FOR SMALL BUSINESS AND HOUSEHOLDS
Today, the Australian Banking Association (ABA) has confirmed banks will extend deferred repayments on loans for up to four months for customers continuing to experience financial difficulty and reduced income as a result of COVID-19.This initiative has been agreed with the Australian Prudential Regulation Authority (APRA) who will provide the banks with extended regulatory relief so that they can continue to support their customers with greater flexibility during this time.
APRA has also provided relief to encourage the banks to restructure loans where possible as a way of helping these customers. The ABA estimates that there are over 800,000 loans that have been deferred worth over $260 billion.
The deferral extension will not be automatic, and will be provided on a case-by-case basis by banks to customers with a demonstrated need for extra time before they return to making repayments. Many customers may need less than four months to either restructure their loan or get back into full repayments.
Banks will work with customers to find the best options to restructure or vary their loan.
Options may include:
Extending the length of the loan
Converting to interest only payments for a period of time
A combination of these and other measures
If, during or at the end of any deferral, customers continue to be severely financially impacted and are unable to make repayments, they will be assisted through their respective bank’s hardship process to determine the best long-term solution for their individual circumstances.
It is important that customers that can afford to make repayments continue to do so. Borrowers that are facing considerable financial difficulty as a result of this pandemic, should talk to their banks and work with them to find a more sustainable approach.
The Morrison Government continues to support both businesses and individuals that have been impacted by the coronavirus crisis and the actions of the banks and APRA today will complement this support and help more Australians get to the other side.
To find out more on the ABA announcement, please click here.
Senator the Hon Michaelia Cash
Minister for Employment, Skills, Small and Family Business
Senator for Western Australia