With the fallout from COVID-19 and the effects it is having on businesses, we understand finances are tough for businesses and individuals at this time.

If you are having financial difficulty the majority of lenders have hardship policies in place for individuals and you should get in touch with your bank. For more information go to the Australian Banking Association – Financial difficulty page which will link to each bank’s assistance package and how to apply.
Here is some further information on loans:

Home Loans

Lenders all have financial hardship policies available if you are unable to meet your existing financial obligations. Arrangements depend on your circumstance and situation and could include:

• deferring or reducing loan repayments
• restructuring and consolidating loans
• altering loan repayments to interest-only

For mortgages, it is important to know these hardship conditions are only temporary and the interest will still be added to the loan resulting in higher repayments later or longer loan terms.

The hardship options are available for clients who lose their job or part of their income during this crisis we are currently experiencing and simply cannot make the payments. Try and continue to pay something off the loan, consider a part payment if you cannot afford the full amount. Review your income and expenses and contact other creditors, gas, electricity, phone or internet providers to discuss your situation. If you simply cannot make a loan payment then take the deferred payment option.

Unfortunately, banks will not hold repayments for 3-6 months and then go back to normal repayments without the balance changing. Make sure you understand the full conditions being offered.

Business and Equipment Finance Loans

Businesses can defer equipment finance loans and principal and interest loans in the same way the home loans can be deferred.
Businesses can also access up to $250,000 in loans.

With the latest stimulus package the Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital. SME’s with a turnover of up to $50 million will be eligible to receive these loans. The Government will provide eligible lenders with a guarantee for loans with the following terms:

• Maximum total size of loans of $250,000 per borrower.
• The loans will be up to three years, with an initial six month repayment holiday.
• The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Loans will be subject to lenders’ credit assessment processes with the expectation lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

As part of the loan products available, the Government will encourage lenders to provide facilities to SMEs which only have to be drawn if needed by the SME.

This will mean that the SME will only incur interest on the amount they drawdown.  If they do not draw down any funds from the facility, no interest will be charged, but they will retain the flexibility to draw down in the future should they need to.

The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.

If you need any assistance with loans at this time our team at Crosbie Finance can help you out, they are still available to be contacted while working remotely on 02 4923 4000 and will do what they can to assist you to navigate his difficult time.