The Australian Banking Association (ABA) has announced that its members have agreed to extend the six-month deferral of loans to an additional 30,000 businesses impacted by the economic fallout from the coronavirus (COVID-19) outbreak.

The new policy — which builds on the ABA’s Small Business Relief Package — expands eligibility criteria for access to repayment holidays to businesses with loan facilities of up to $10 million, up from $3 million.

According to the ABA, the updated policy would apply to approximately 98 per cent of all businesses with loans secured from an Australian bank and would encompass a further $100 billion in business loans ($250 million in total).

The banking association said businesses with total loans of more than $10 million may also be eligible for the relief but would be assessed “on a case-by-case basis”.

Banks have also agreed not to enforce business loans for non-financial breaches of the loan contract, like changes to valuations.

The ABA noted that the new measures will apply across all sectors of the economy, and on an opt-in basis, under the conditions that:

• for commercial property landlords — they provide an undertaking to the bank that for the period of the interest capitalisation, they will not terminate leases or evict current tenants for rent arrears as a result of COVID19
• the customer has advised that its business is affected by COVID-19
• the customer was current in terms of existing facilities 90 days prior to applying
• interest is capitalised – meaning either the term of the loan is extended, or payments are increased after the deferral period.

The announcement of the revised policy follows the federal government’s decision to introduce ab eviction moratorium and provide rent relief for commercial tenants.

ABA CEO Anna Bligh commented: “As this crisis has deepened and more businesses are affected, we are building on the Small Business Relief package to ensure more businesses are given a lifeline to help them survive through the coronavirus pandemic.

She added: “The type of businesses this applies to includes commercial landlords of properties such as local shopping centres, pubs, clubs and restaurants, who must agree not to terminate leases or evict current tenants for rent arrears due to COVID19 in order to access support.

“This will help protect many more thousands of small businesses from being evicted if they are struggling to pay the rent as it covers approximately 90% of commercial property owners who have loans with an Australian bank.

Ms Bligh concluded: “Where landlords within this threshold do the right thing by their tenants, banks will do the right thing by them.”

The updated policy was developed in conjunction with the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments commission (ASIC).

The policy remains subject to approval from the Australian Competition and Consumer Commission (ACCC).