SME Loan Deferral Assessments Commence - ABA
(08 September 2020 – Australia) The Australian Banking Association (ABA) declares that over 100,000 business loan deferrals to small to medium sized enterprises (SMEs) will be assessed in the December quarter as preliminary six month deferral agreements close out.
Of the more than 900,000 loans have been deferred across the pandemic worth close to A$300 billion, at least 450,000 loan deferral customers will be assessed immediately. Of the 105,000 business loan deferrals to SMEs, 65,000 will be assessed by the end of September, and 40,000 by the end of October. Of 900,000 deferred business loans and mortgages in total, 13 percent of customers have in fact already resumed repayments as of the end of July.
Banks estimate that an additional 100,000 customers resumed scheduled loan payments in August. ANZ has provided repayment deferrals on more than 100,000 home, personal, small business and commercial accounts since March 2020. Commonwealth Bank has granted over 250,000 loan deferrals to customers among its home, personal and business lending. NAB had nearly 40,000 business loans and more than 98,000 home loans deferred as of June and confirmed it would offer an extension on business loans to the end of Q1 2021 on a case-by-case basis. Westpac has supported 23,000 SMEs and 130,000 mortgage customers in deferring loan repayments.
Importantly CBA did not report on JobKeeper figures relating to deferred home loans, although approximately 30 percent of business loan deferrals were made by those receiving JobKeeper.
To avoid a ‘cliff’ at the end of September, businesses facing hardship due to COVID-19 will be able to apply for loan deferral extensions of up to four months. The next steps presented to customers during these assessment calls will include:
- Those who can resume repayments at the end of their deferral, will be required to do so
- Those still in difficulty, will work with their bank to restructure or vary their loan
- Following the assessment once the bank understands the customers circumstances, in some cases, a further 4-month deferral may be granted, but this will not be automatic
- Customers who will be unable to pay their loan over the longer term will be offered tailored assistance that addresses their needs
- Customers who recommence repayments on their existing loan, enter into a new repayment arrangement, or extend their deferral period with approval from their bank will not see their credit report impacted (provided they meet the new repayment arrangements).
“The loan deferral measure offered to customers by Australia’s banks has led to the largest ever customer contact process in the industry’s history, with an additional 5000 new or redeployed staff working to ensure customers understand their options” ABA CEO Anna Bligh said.
“An additional 5000 new or redeployed staff from Australia’s banks have been working to ensure customers understand their options. Customers know what’s best for them. It’s the bank’s job to set out all the options and implications and ensure customers have the information and the time to make the right decision to suit their needs. As customers who are able to begin their repayments again, it allows banks to focus their support on those who really need it” Ms Bligh added.
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