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COVID-19 SUPPORT: PHASE TWO

As customers approach the end of their six-month loan repayment deferral period, banks have outlined three key stages to repayment.

In this next phase, customers who can restart paying their loans will be required to at the end of their six-month deferral period. Others experiencing ongoing financial difficulty need to work with their bank to restructure or vary their loan so they can start making repayments. Banks may be able to offer a deferral extension in this circumstance.

1. You can pay in full

If you can restart paying your loan, then you’ll be required to do so at the end of your deferral period.


2. You can partially pay

If you’re in ongoing financial difficulty, you may have your loan restructured or varied to allow you to return to paying off your loan.

If you can’t restructure, you may be eligible for an extra deferral period of up to four months.

During this four month extension, you will be expected to work with your bank to find the best solution to return to repayments.

This four-month extension will not be automatic, it will only be provided to those that banks believe will genuinely benefit from extra time.


3. You cannot pay

If, during or at the end of any deferral, you cannot make repayments, you will be assisted through your bank’s financial hardship process to determine your best long-term solution.

Banks will communicate with you in a clear and timely manner, act with honesty and integrity and treat you in a fair and ethical manner.

Banking Code of Practice

Banks have developed this response following discussions with APRA and ASIC to provide the appropriate regulatory treatment. 


SME Loan Guarantee Phase Two: from Oct 1 2020


SME Guarantee loans can now be larger, longer term and for a wider range of purposes.
The initial phase of the Scheme remains available for new loans issued by eligible lenders until 30 September 2020.
The second phase of the Scheme will start on 1 October 2020 and will be available until 30 June 2021.

Key October 1 changes to the SME Loan Guarantee include:

• Loans can be for a wider range of investment, beyond working capital
• Secured lending now permitted (excludes commercial or residential property)
• Maximum loan size increased to $1 million (from $250,000 per borrower)
• Maximum loan term now five years (from three years)
• Lenders can now offer a repayment deferral period.


Financial Hardship

You’re defined as being in Financial Hardship when you’re unable to meet your existing financial obligations for a period of time. 

If you’re in financial hardship, you have the right to request a repayment arrangement. This repayment arrangement is known as a Hardship Variation.


Hardship Variation

If you request a Hardship Variation, you can request any type of repayment arrangement as long as it will assist you to reasonably repay your outstanding debts.

This could include a short-term reduction in repayments, waiving fees and charges or consolidating debts to make them more manageable.

Your bank must respond to the requested arrangement within 21 days, either agreeing to the hardship variation or providing reasons why it is refusing the request.

If a response is not provided, you can:

  • keep negotiating for an arrangement,
  • seek a review of the decision by AFCA or
  • go to court.

Read more about the Financial Difficulty

What is Impairment?

For every dollar that an Australian bank lends, regulation requires them to hold a certain amount of capital.

If banks don’t charge interest, even if the loan is deferred, the loan must then be treated as ‘impaired’ under accounting and banking rules.  The bank is then required to hold more capital to support that ‘impaired’ loan.

If banks stopped charging interest on the hundreds of thousands of deferred loans during the COVID-19 pandemic they would not have enough capital to provide new loans.

That would not be in the best interest of Australians and the need to support the Australian economy.

When banks defer a loan, it’s a ‘freeze’ not a ‘stop’ on your repayments.

The interest that you would have paid during the deferral is added to your loan and becomes part of your total debt. This is called ‘interest capitalisation’.

For member banks of the ABA, there is no ‘balloon payment’ at the end of COVID-19 deferrals.

 

Find your bank

Select your bank to find out more about their individual relief packages
AMP

Phone: 1300 130 191
Hardship Assistance: Website

Visit website
ANZ

Phone: 1800 351 548
Financial Hardship: Website

Visit website
Arab Bank Australia

Phone: 1800 64 64 84
Hardship Assistance: Website

Visit website
Bank Australia

Phone: 132 888
Hardship Assistance: Website

Visit website
Bank of Melbourne
Visit website
Bank of Sydney

Phone: 13 95 00
Hardship Assistance: Website

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BOQ Group

Phone: 1800 079 866
Hardship Assistance: Website

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Bank SA

Phone: 1800 679 461
Hardship Assistance: Website

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Bankwest

Phone: 1300 769 173
Hardship Assistance: Website

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Bendigo and Adelaide Bank

Phone: 1300 652 146
Hardship Assistance: Website

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Citi Bank

Phone: 1300 652 146
Hardship Assistance: Website

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Commonwealth Bank

Phone: 1300 720 814
Hardship Assistance: Website

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HSBC Bank

Phone: 1300 555 988
Hardship Assistance: Website

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ING Bank

Phone: 1300 349 166
Hardship Assistance: Website

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Macquarie Bank

Phone: 1300 363 330
Hardship Assistance: Website

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Me Bank

Phone: 1300 500 520
Hardship Assistance: Website

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MyStateBank

Phone: 13 800 1
Hardship Assistance: Website

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NAB

Phone: 1800 701 599
Hardship Assistance: Website

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Rabobank

Phone: 1800 025 484
Hardship Assistance: Website

Visit website
Rural Bank

Phone: 1300 660 115
Hardship Assistance: Website

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St. George Bank

Phone: 1800 629 795
Hardship Assistance: Website

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Suncorp

Phone: 1800 225 223
Hardship Assistance: Website

Visit website
U Bank
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Westpac

Personal: 132 032
Small Business: 132 142

Hardship Assistance: Website

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