Australian banks will extend the six-month deferral of loans to 30,000 more businesses to help them cope with the COVID-19 pandemic.
The additional measure, announced on Monday by the Australian Banking Association, will see the repayment deferrals expanded to businesses with loans up to $10 million, up from $3 million previously.
During the six-month period, banks have also agreed to not enforce terms for non-financial breaches of the loan contract, such as changes in valuations.
The new measures, which are on an opt-in basis, will be applicable to customers who advise that their business is affected by COVID-19.
The customer should have been current in terms of existing facilities for 90 days prior to applying for the deferral, which will involve either the term of the loan being extended or payments increased after the deferral period.
ABA chief executive Anna Bligh said the support would apply to the likes of commercial landlords of properties such as local shopping centres, pubs, clubs and restaurants, who must agree not to terminate leases or evict current tenants for rent arrears due to COVID19 in order to access support.
Ms Bligh said the move would help protect many more thousands of small businesses from being evicted if they are struggling to pay the rent.
“Where landlords within this threshold do the right thing by their tenants, banks will do the right thing by them,” she said.
The extension will apply to businesses generally much larger and employ a greater number of people and this support will apply to an additional $100 billion of business loans, ABA said.
“When combined with the previous small business assistance announced just over a week ago, this means $250 billion worth of loans covered are able to access a six-month deferral of payments, which means dollars staying in the pockets of businesses throughout this crisis,” Ms Bligh said.
Businesses with total loans of more than $10 million may also be eligible for relief, but this will need to be considered on a case by case basis as they are often much more complex in their structure.
Banks have developed this relief package following discussions with APRA and ASIC to provide the appropriate regulatory treatment.
This measure is announced subject to authorisation from the ACCC.
The ABA’s announcement has already received support from the big four banks..