We have had a number of business customers asking us about the funds made available by the federal government to offer business support loans at this time to bridge the gap.
We have summarised the offering from the 4 major lenders below and included links to their respective Covid 19 Support webpages.
In discussions with the lenders, these loan options will really only be open to well established business who have a positive trading history and can demonstrate serviceability of the debt over a short term (amortised over a 3 year period in most cases) once normal trading resumes in around 6 months. In general, lenders will be looking at 2019 business financials and Sep 2019 and Dec 2019 BAS statements in assessing these loans.
While most lenders are saying these loans are available to existing and new to bank businesses, our discussions with the lenders have indicated that there are larger hurdles that new to bank businesses would need to overcome to get access to these business loans.
Customers also need to put forward a solid business plan on how the business will re-emerge when Covid 19 restrictions are eased and our input as your accountants will be valuable in putting together a great business case. Make sure you contact us before going to the banks to seek additional lending.
As always we would be happy to assist you with these business loan applications and guide you through the process and the lenders requirements.
ANZ Bank Business Support Loan
The options available to customers will depend on the size of their business and may include the following:
- A new three-year business loan of up to $250,000, with a six-month deferral on repayments (interest will be capitalised1)
- A new six-month business overdraft of up to $250,000, with a six-month deferral of interest.1 At the end of the six months, customers will have the option of fully repaying the overdraft or rolling the balance into a term loan for up to 2.5 years
Please note that eligibility and credit criteria will apply, including:
- Customers who are small and medium-sized businesses with a turnover of less than $50 million can apply
- Available for new lending only from 6 April, approved by 30 September 2020
- The customer’s business must be based, registered and operating in Australia
- The loan must be used to support their current and upcoming business cash flow needs only (including working capital, liquidity and operating expenditure)
- The loan cannot be used to refinance drawn facilities with ANZ or another lender.
Commonwealth Bank Business Support Loan
Offering an unsecured loan of up to $250,000* (lending criteria applies) with no establishment, no account fees, and no repayments required for 6 months for small and medium-sized businesses with less than $50 million annual turnover. For the first 6 months, interest will be deferred and capitalised at a reduced variable rate from 4.5% p.a.. From 6 months, principal and interest payments will be required. Both current CommBank business customers and new-to-bank customers are eligible.
What is available?
- Three year, unsecured BetterBusiness Loans of up to $250,000 for working capital purposes only (not asset purchases or refinancing of existing debt).
- For the first six months, all repayments are deferred
- For the remaining term of the loan, amortising principal and interest repayments will be applicable
- No establishment or account fees
This offer is for new loan applications only and cannot be applied to existing loans, including top-ups or variations. Customers may only access one loan under this offering. The BetterBusiness Loan includes online redraw capability, which means customers will only pay interest on drawn balances.
Who is eligible? Small to medium sized businesses and community groups with an Australian Business Number (ABN) and an annual turnover less than $50 million can apply for loans under this offering. The offer is limited to one loan per customer. Not-for-profit organisations with turnover less than $50 million are also eligible.
National Australia Bank Business Support Loan
The Business Support Loan will enable eligible businesses to apply for a loan of up to $250,000 at 4.5% p.a. from NAB with no repayments required in the first six months. To be eligible, businesses must have an annual turnover of less than $50 million.
- Open to new and existing NAB Business customers – new applications only
- Loans must be for business purposes
- Loan term up to three years
- Principal and interest repayments will apply only after an initial six-month repayment holiday
- No application or loan services fees will apply
- Loans will be available up until 30 September 2020
Westpac Bank Business Support Loan
Westpac’s 3 Year- Term Unsecured Business Loan up to $250k, which has been designed to assist new and existing Small Business Customers requiring relief and assistance from the current impacts of COVID-19. For eligible new and existing customers with turnover of less than $50m, as part of the Federal Government’s latest economic support measures that guarantees 50 per cent of new loans issued by eligible lenders to small and medium size businesses. Effective Monday 23 March 2020, credit criteria applies.
This policy may be used where your client is seeking access to funding assistance under the ‘Government Guarantee’ loan scheme including Business and Equipment Finance lending products for:
- Lending up to $250k.
- Maximum 3-year term (fully amortising after 6 months)
- No additional security (Director’s Guarantees are required)
Criteria and Guidelines:
- Core banking relationship held with Westpac.
- Bank accounts must be in good order prior to 1 January 2020.
- All Borrower(s) and Guarantor(s) must have a clear Credit Bureau file with no adverse history prior to 1 January 2020.
- Client has not accessed more than $250k of additional funding for Covid-19 assistance
- Clients existing total Westpac Group (Westpac, St.George, Bank of Melbourne and BankSA) borrowings are less than $3m.
- The loan amount requested must not exceed total business expenses for the 6-month period to December 2019 (6 months BAS Statements required to validate).
- There has been no material change in the client’s capacity to service the debt prior to COVID-19.
- All statutory payments are up to date prior to 1 January 2020.
Stay safe – we are here to support you because together we will get through this