The Australian Banking Association has announced the major banks have been in discussion with APRA and ASIC to extend existing COVID-19 relief to allow further deferrals of mortgage repayments past six months.
Customers with reduced incomes and ongoing financial difficulty due to COVID-19 will be contacted by their banks and, if they cannot return to repayments or restructure/vary their loan (for example by extending the length of the loan or converting to interest-only repayment for a period of time) to support their current financial situation, they may be able to extend their repayment deferral by another four months (ending no later than 31 March 2021).
The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says thousands of COVID-impacted small businesses will be relieved by the ABA’s loan deferral extension announced today.
The ABA says banks will extend deferred loans for small businesses that are still struggling for an extra four months, potentially helping as many as 800,000 borrowers with deferred loans worth an estimated $260 billion.
The initiative has been agreed to by APRA and ASIC, which have made a collective effort to support those facing financial hardship as a result of the pandemic.
“Small business owners who have been worried about how they will repay their loans come September, will be breathing a huge sigh of relief today,” Ms Carnell says.
“I would encourage small businesses who are experiencing financial difficulties, to call their banks now to make the necessary arrangements.
“With hundreds of small businesses now facing another devastating six weeks of lockdown in parts of Victoria, it’s clear that this is not over and the path to recovery will be prolonged.
“Small businesses are going to need further support, such as the loan deferral extensions announced today.
“As we navigate this unprecedented crisis, it’s encouraging to see our banks are taking this proactive and flexible approach.
“We want to see as many small businesses survive this difficult time as possible. The ABA announcement today is an important piece of that puzzle.”