Lending options during COVID-19

With so many changes and measures of support being released to address the economic impact of COVID-19, it is sometimes difficult to keep informed of the specifics of each measure. At these times it is best to seek guidance from specialists in each area. As such our lending partner, Shaun Massie of mobilelender.com.au, has provided our team with a summary of the lending options available to personal and business loan customers and we felt it important to share with our clients.

Home loan customers

The main relief here is for a deferment of loan repayments for up to six months, with interest capitalised. A number of lenders are reviewing the position after three months to see if a further extension is required.

Key points:

  • If people do take up the payment deferments is it the expectation of APRA on the banks that this does not impact their credit history adversely
  • In its current form, payment deferment does not mean that lenders will forgive interest. Interest will continue to be charged and capitalised to the loan. So this means that once the deferment finishes the loan will be higher than when the deferment begins and therefore payments will need to adjust to be higher to ensure the loan is paid out within contract terms or some lenders will extend the loan term so repayments do not increase.
  • Before reaching out to a lender to take up the deferment option it may pay to look at options such as accessing any accumulated funds in redraw, or reducing repayments to a minimum.

Business customers

Like home loan customers, the lenders are offering a payment deferment of up to six months, with interest capitalised. This includes business lending such as term loans, asset finance and some lenders allowing increases in overdraft limits.

Coronavirus SME Support Scheme

As part of the government stimulus package lenders are offering unsecured loans for businesses impacted by COVID-19. This will be available soon, lenders are still finalising the offer and we will have more detail in the coming days.

Key points:

  • Unsecured loans from $10,000 up to $250,000 for businesses with turnover less than $50m
  • Rate of 4.50%
  • Loan term up to three years with no repayment for first six months, with interest capitalised. Principal and interest payments to start after six months
  • No application on ongoing service fees
  • For new lending working capital purposes only, i.e. not for refinancing, property or equipment purchases or SMSF
  • Bank lending criteria to apply and normal documentation requirements. More streamlined applications for the sub $50,000 amount.

Please note individual lenders will have their own variations on the above summary and you should consult your provider. It is a rapidly changing situation and we will keep you updated with the key information regarding lending as it becomes available.

Please contact us if you wish to seek more information or to arrange an appointment with Shaun.