Australian banks will defer loan repayments for small businesses affected by the coronavirus for up to six months.
The Australian Banking Association on Friday announced the relief package for small businesses, which is expected to apply to more than $100 billion of existing small business loans.
Australian Banking's peak body chief executive Anna Bligh said the package for small businesses was a “multi-billion-dollar lifeline” to keep small businesses open and employing people.
“This assistance package will apply to more than $100 billion of existing small business loans and depending on customer take-up, could put as much as $8 billion back into the pockets of small businesses as they battle through these difficult times,” Bligh said.
Banks are putting in place a fast track approval process so businesses suffering can access funds “as soon as possible”, with small businesses employing around five million Australians.
“Small businesses are the most vulnerable part of the economy and have the most urgent need for assistance,” Bligh said.
Bligh said the banks have developed the small business relief package following discussions with APRA and ASIC, adding that small business that haven’t been contacted should contact their bank to apply.
The Australian Competition and Consumer Commission granted the interim authorisation on Friday afternoon after the ABA’s application was lodged Thursday night.
The banks have been working with the government on measures to support the economy through the health crisis, which has begun to have impacts across the economy.
Treasurer Josh Frydenberg announced a $15 billion stimulus package to smaller lenders on Thursday.
While the market faces major uncertainty amid the health crisis, with a new limit of one person per four square metres for indoor venues put in place Friday afternoon, Morrison said that the package goes towards supporting businesses with fixed ongoing commitments such as rent and lease payments.
The Reserve Bank also announced a $90 billion funding scheme on Thursday to spur lending to small and medium-sized businesses, following the Reserve Bank's emergency cash rate cut to 0.25 per cent on Thursday.
The central bank will now move to buy Australian government bonds as part of its first-ever quantitative easing program to encourage lending, investment and boost cash supply.
Following Bligh's announcement, the big four introduced their own measures for customers affected by COVID-19 to pause home mortgage repayments for six months.
ANZ also followed with an announcement, saying that its mortgage customers would see variable interest home loan rates dropped by 0.15 per cent.
Westpac, NAB and ANZ will also introduce a two-year fixed rate of 2.19 per cent for owner occupiers paying both principal and interest.
