Australian banks deploy SME COVID-19 support
(20 March 2020 – Australia) Australian banks are racing to disperse the federal government’s A$40 billion business guarantee loan scheme, hurriedly enacting pandemic contingency responses to keep branches open in states such as New South Wales and Victoria where non-essential services are being closed indefinitely.
Under the new scheme, the federal government will guarantee 50 percent of new loans issued by eligible lenders to SME businesses. The coronavirus SME Guarantee Scheme provides unsecured loans of up to A$250,000 to businesses, speeding up access to working capital. The United Kingdom has announced a similar scheme, titled the ‘Coronavirus Business Interruption Loan Scheme’.
In response to the new business loan scheme, CBA said it would make up to $10bn available in additional unsecured credit to support small and medium-sized businesses.
It will charge rates 500 basis points (bps) lower than current unsecured business loan rates, inferring the annual rate will fall to four percent. Repayments are not required for six months and no interest applies unless the loan is drawn down.
“By acting quickly, we can soften the impact of the coronavirus on small businesses across the country and the millions of Australians who depend on them for employment,” CBA CEO Matt Comyn stated.