Loan deferrals to be assessed in the coming months
Over 100,000 business loan deferrals to small and medium businesses will be assessed over the next few months as the initial six-month deferral period comes to an end, says the Australian Banking Association.
As part of ongoing COVID-19 strategies, banks have begun the process of contacting customers to discuss the next stages in support and assistance.
According to the ABA, 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, including converting to interest-only payments for a period, or extending the term of the loan.
- Following the assessment, once the bank understands the customer’s circumstances, in some cases, a further four-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.
Banks have warned extensions will not be automatic and any customer who can afford to start repaying their mortgage or business loan will be expected to do so once the initial six-month deferral period expires in September but the support is there for those who are experiencing financial hardship.