COVID-19: What to know when preparing to talk to your bank

Businesses and the community as a whole are bearing the brunt of COVID-19 with the mental, physical and financial impacts starting to hit hard. At Mazars, we’re actively talking with our clients and encouraging them to contact their Bank to start the process of putting in place plans to preserve cashflow and protect their staff, business and assets.

When preparing to talk to your bank it’s important to think through the questions they’ll be asking. Being prepared is the key to getting help in a timely manner, so we’ve listed below some points you may like to consider:

  • Explain how your business and or personal finances have been impacted;
  • Provide examples of the impacts such as:
    • loss of income from a forced closure due to social distancing;
    • customers taking longer to pay; and
    • usual customers are also impacted so have reduced or no demand.
  • Most importantly, include other measures you are taking to preserve business and how you see the business recovering; and
  • Have a chat with your Mazars advisor who can help draft a letter and or assist you in communicating with the Bank.

Most Banks have set up a special support team to specifically answer queries and assist with restructuring your personal and business facilities and support with emergency lending. The number of measures of assistance has expanded to include:

  • Up to 6 months extensions on business term loans & equipment finance including deferment of principal and interest and interest only;
  • In some cases, a further discount on interest rates;
  • Short term support via a business overdraft at discounted rates, in some cases;
  • Business Credit Card support in the form of pausing credit card repayments for up to 6 months; and
  • Fee waivers on some terminal rentals for up to 6 months.

Initiatives to support the flow of credit

On Sunday 22 March 2020, the Government announced further assistance to small and medium size businesses (SME) via a Coronavirus SME Guarantee Scheme . As stated by business.gov.au , “Under the Scheme, the Government will provide a guarantee of 50 per cent to small and medium enterprise (SME) lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.”

The idea around this Scheme is that SMEs will need short term cash flow to get through the next few months and timely distribution of these loans will need to come through the banking system.

Further announcements indicate new loans will be available from April 2020 until September 2020, with indicative details including:

  • SMEs with a turnover of up to $50mil will be eligible;
  • Maximum loan size $250,000, unsecured finance;
  • 3-year loan term with a 6 month loan repayment holiday;
  • Interest charged on loan balance utilised;
  • Will be administered through the banking system on an unsecured basis with 50% of loan balance guaranteed by the Government; and
  • Loans will be subject to a credit approval process however, the Government’s expectation is that lenders will look through the cycle to make loans, noting there is an exemption from responsible lending obligations during this period.  

We recommend that you review the Federal Government Coronavirus SME Guarantee Scheme for further details as well as speaking to your bank.

For further informing around the assistance programs offered by the major banks follow the links below:

Personal Lending:

Business Lending:

NAB

NAB

WBC

WBC

ANZ

ANZ

CBA

CBA

You’re not alone, we are here to help:

If you would like assistance around your eligibility of various finance initiatives on offer, or would like support when dealing with your bank, please contact your usual Mazars adviser or speak with Owen Dingle  or Angela Winton  in the Finance and Consulting Team at Mazars in Brisbane, Brad Purvis in Melbourne or Dean Newman in Sydney.

 

Brisbane – Angela Winton & Owen Dingle

Melbourne – Brad Purvis

Sydney – Dean Newman

+61 7 3218 3900

+61 3 9252 0800

+61 2 9922 1166

 

Published: 25 March 2020

Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

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