If you’re struggling to keep on top of your business finances, you’re not alone.
Your bank will have a dedicated financial assistance team ready to listen and assist during these tough times.
It’s important to be open and realistic when talking about your financial position.
Under the Banking Code of Practice, your bank is required to consider how they can help you with your financial difficulties.
My business loan deferral is coming to an end
If your bank has put your loan repayments on hold and this is due to come to an end, it’s a good idea to follow these steps:
- Check there are sufficient funds available for you to meet the loan repayments and/or your business credit card repayments are properly arranged
- Check the direct debits to the account as they will also start again.
It’s also advisable to review and update your business budget before the deferral period ends. The Australian Government’s business website includes guides and tutorials to help you plan and run your business including budgeting advice.
If you have any questions about the arrangement in place or require more information speak to your bank.
What interest will I pay due to a deferral?
In most deferral arrangements, the interest and any principal repayments you’d have normally paid during the deferral period will continue to accrue. This will be added to your outstanding business loan balance to be paid once the deferred period ends.
This can be paid by either extending the term of the loan, increasing repayments, or a combination of both. Your bank should contact you with options towards the end of your deferral period or you can contact the bank.
When your bank set up the deferral, you will have received details of the arrangement in writing. You should check what your bank said would happen when the deferral ends.
What if I think I can’t afford full repayments on my business loan?
Your bank is ready to listen and help. Don’t be afraid to contact them as soon as possible. The sooner you do, the sooner they can help you find a solution that is right for you.
It is also a good idea to consider what changes you can make to prepare:
- Review your budget and business plan
- Speak to a free small business financial counsellor or if you are in a regional area a rural financial counsellor. The earlier they get involved the better
- Seek independent advice from an accountant or business adviser about restructuring your business
- The Australian Tax Office’s business viability assessment tool could assist you to review the strength of your business
What are some of my options?
Depending on your circumstances and your bank, there may be a number of options your bank could offer to help your business through these difficult times. These include:
- Reducing repayments or restructuring your loan
- Talking to your bank about selling business assets to repay your loan. If your annual turnover is less than $50 million, you may be eligible for a loan under the Government’s Coronavirus SME Guarantee Scheme (check with your bank to see if they are participating in the scheme)
- For information about 2021 COVID-19 small business support in your state visit the Australian Government’s business support portal
- The Australian Government’s business website includes a tool to help you search grants and support programs available to small business.
Your bank may also ask you for relevant information depending on the circumstances. For example, an updated statement of position or a valuation may be required, so they can better understand how they may be able to help with the potential options available.
If your bank doesn’t allow you to change the terms of your loan, they need to tell you why, in writing.
Take care of yourself and seek help with your business decisions.
Please reach out if you’re feeling stressed about your financial situation. Contact a small business financial counsellor (1800 413 828) or if you are in a regional area contact Rural Financial Counselling services (1300 771 741) who can provide you with free, confidential planning and support to help make better informed financial decisions for you and your business.
Alternatively, you can speak with an accountant or professional adviser.
You could also contact Beyond Blue on 1800 512 348. They offer a financial wellbeing and mental health support service.
Beyond Blue’s NewAccess program is designed to support small business owners manage life stress by providing up to six structured sessions with a trained mental health coach who has a background in small business. The program is available nationally and can be accessed via phone or video call.