As we all are witnessing, the economic and social impacts of the coronavirus (COVID-19) pandemic is unprecedented and rapidly evolving.
Our economy has never been more globally connected, whilst some Australian industry sectors are experiencing a surge in activity, a vast majority are facing a rapid evaporation of their cash reserves – none more so than local small businesses like yours.
In the face of such enormous disruption, our banks, the Australian Banking Association, regulators, the RBA and the government have come together to develop a relief package aimed at protecting the cash flows of small businesses to enable them to stay in business and continue employing the five million Australians that work for them.
Key benefits of the package
• The RBA backed a term funding facility for banks to support lower cost lending to small and medium businesses.
• Deferrals of loan repayments of principal and interest for up to six months for small businesses, including equipment finance leases and business credit cards.
• Fast tracked approval processes to enable small business to get access to these relief packages as soon as possible.
• $100B in loans eligible for the package.
• These measures are forecast to leave up to $10B in the hands of small businesses to help them stay in business.
How the banks responded
• Business customers experiencing financial difficulty can defer principal and interest payments on a range of floating and variable rate loans, equipment leases and business credit cards.
• Banks are utilising the RBA rate cut and quantitative easing to allow them to cut rates on business lending.
• Many are providing even greater rate cuts for customers using digital banking products.
• Banks are also expected to put in place a fast track approval process so businesses suffering cash flow pressures receive the support they need – as soon as possible.
• The RBA backed a term funding facility for banks to support lower cost lending to small and medium businesses.
• Deferrals of loan repayments of principal and interest for up to six months for small businesses, including equipment finance leases and business credit cards.
• Fast tracked approval processes to enable small business to get access to these relief packages as soon as possible.
• $100B in loans eligible for the package.
• These measures are forecast to leave up to $10B in the hands of small businesses to help them stay in business.
How the banks responded
• Business customers experiencing financial difficulty can defer principal and interest payments on a range of floating and variable rate loans, equipment leases and business credit cards.
• Banks are utilising the RBA rate cut and quantitative easing to allow them to cut rates on business lending.
• Many are providing even greater rate cuts for customers using digital banking products.
• Banks are also expected to put in place a fast track approval process so businesses suffering cash flow pressures receive the support they need – as soon as possible.
This policy is firmly targeted towards Australia’s small businesses to assist them in these unprecedented times caused by the coronavirus pandemic. These measures will provide small businesses with real cash retention measures that will assist them to stay operating through the crisis.
We suggest that you should seek help and advice from your banking advisors on how to access the benefits of this package.
You will need to consider the specific terms of the benefit and take steps to position yourself and your business to be able to obtain maximum support on offer (eg setting up digital banking if you do not have it already).
Communicating with your bank is critical at this point, and they will be able to help you build these benefits into your short term cash flow forecasts.
We here at KPMG Australia recognise the critical role that you and your small business plays in the community and in providing employment for millions of Australians.
It is clear that this sector is vulnerable to the impact of the coronavirus pandemic and we strongly support any initiatives provided to assist you and your business in maintaining cash.
There is no doubt that nimble, innovative and targeted responses will be vital to managing the challenges you may be experiencing.
Critical to successfully doing so will be all stakeholders – government, RBA, regulators and the private sector – working together. Now is the time for a united and community-focused response.
Information accurate at the date and time published. Darren Ball is a Partner, Enterprise SA Geographic Lead, KPMG Australia.
