The Australian Banking Association has announced it will be extending the terms of the loan relief available for businesses. An extra 30,000 business are estimated to now be eligible for this relief with the maximum loan balance being increased from $3 million to $10 million.

Here are the details of this scheme: –

 – businesses or commercial landlords must apply to banks for the relief;

– loans will have repayments frozen for 6 months with the interest being capitalised;

– the banks will need to satisfied the applicant has been impacted by COVID-19;

– the loan in question must have been current in terms for the last 90 days (i.e. all payments made and up to date over the last 90 days);

– commercial landlords must give undertakings that they will no evict tenants or terminate their lease during this period if rent is unpaid or paid late.

 Although this measure will provide short term cash flow relief for eligible parties, it should be noted at the end of the repayment freeze period of 6 months that the loan balance will have increased. As such, the loans will either need increased repayments at the time the repayments are re-commenced to have the loan repaid in the same term or have the term of the loan extended if borrowers want to keep the same repayment amounts as before the freezing period.

 If you have any queries or need assistance, please do not hesitate to contact us.