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Australian banks offer COVID customer relief

The Australian Banking Association (ABA) which represents Australia’s largest financial institutions has announced a package to support customers affected by the COVID-19 lockdowns. ABA estimates the package may cover up to 98 percent of small businesses across the country.

The ABA package includes:

1. Business banking repayment deferrals

  • Up to 3 month repayment deferrals, with loan terms extended accordingly
  • Offered to all small business customers (business lending less than $3m and a turnover of less than $5m), which encompasses up to 98% of small businesses
  • Only for loans in good standing (i.e. repayments up to date or engaged in a payment program with their bank).

2. Everyday banking support

  • Refunds of merchant terminal fees for up to 3 months
  • Waiving fees and notice periods on Cash Deposit and Farm Management Deposit accounts for up to 3 months.

3. Home loan support

  • Range of support measures, including deferrals on a month by month basis
  • Availability to both individual and business customers.

“Customers can rest assured that if they need help, they will get it. Your bank will help you find a way through, don’t tough it out on your own,” said ABA CEO Anna Bligh.

The package is subject to re-authorisation by the ACCC which the ABA is urgently seeking.

Westpac offers interest free cash flow option for small business customers impacted by lockdowns

Westpac has implemented new measures to support existing small business customers with their cash flow needs, if revenue has been significantly reduced as a result of the latest lockdown restrictions.

Westpac offers eligible existing small business customers interest free temporary overdrafts up to $15,000 on a maximum 45-day term, designed to help bridge the gap to government assistance.

Westpac CEO Peter King said: “We know that the current lockdowns mean some of our small business customers may need urgent access to cash. We have introduced a new interest free overdraft to act as a bridge to when government payments flow-in, helping small business owners to cover urgent expenses during this time.”

Westpac has outlined a range of support measures for eligible small business customers, including:

  • Interest free temporary overdrafts for existing business customers, up to $15,000 for a maximum of 45-days
  • Eligible small business customers with total committed exposure of up to $3m will be able to defer loan repayments for three months on certain products, with loan terms extended as required, to assist with cash flow
  • Eligible small business customers with Merchant Terminal will be able, upon request, have the merchant terminal rental fee refunded for up to three months
  • Eligible business customers with Term Deposit or Farm Management Deposits will be able to terminate early to access their deposit with no penalty interest rate adjustment
  • Eligible customers may be able to access low interest rate business loans through the Federal Government’s SME Recovery Loan Scheme
  • Case management support for our small business customers experiencing financial difficulty
  • Business loan restructuring with no fees incurred.
  • Referrals to financial counsellors or other support services.

Understand the various packages and grants available in your state

State and Federal Governments have announced various packages available to support Australian businesses.

New South Wales

Refer to our previous COVUD Support Edition highlighting specific packages and government grants available and how to access here.

Victoria

The Victorian and Commonwealth Government announced on 28 July 2021, that they will fund extra support packages for Victorian small and medium businesses.

These include:

1. Business continuity fund

Grants up to $5,000 will be available to businesses that remain impacted by capacity limits – an additional $2,000 will be available to businesses located in the CBD.

2. Licensed hospitality venue fund 2021

Up to $20,000 will be available for licensed venues, with an additional $2,000 available to businesses located in the CBD.

3. Small business COVID hardship fund

Grants of up to $5,000 will be available to support small business who have not been eligible under existing business support funds. To be eligible for this grant, businesses will require a payroll of up to $10 million and have experienced a 70 percent or greater reduction in revenue.

4. Alpine business support program

Grants between $5,000 to $20,000 are available for 430 Alpine based businesses in recognition of restricted travel during peak winter season.

5. Commercial tenancy relief scheme

The Commercial tenancy relief scheme has been reintroduced to provide rent relief for eligible businesses. In addition, a support fund has been announced for landlords who provide rent relief to eligible tenants. Business must have an annual turnover of less than $50 million and have experienced a decline in turnover of 30 percent to be eligible for this grant.

6. COVID-19 Disaster payment

The Commonwealth Government has introduced a support payment available for workers adversely affected by the state health order. Eligible recipients will be entitled to:

  • $600 per week, for people who have lost 20 hours or more of paid employment per week; or
  • $375 per week, for people who have lost between 8 and less than 20 hours per week of paid employment, or a full day of your usual work hours.

Queensland

The Queensland Government has introduced a 2021 COVID-19 Business Support Grant, offering up to $5,000 to small and medium businesses across Queensland affected by COVID-19 lockdowns and lockdowns in other states.

To be eligible for the grant, businesses must have experienced at least a 30 percent reduction in turnover as a result of the lockdown. Applications opened on 16 August and will close on 16 November 2021. All eligible businesses who apply for a grant during the 3-month application period will receive funding. To apply, please click here.

The COVID-19 Disaster payment is also available in QLD, to check eligibility or apply for click here.

The National Tax and Accountants Association have provided a full breakdown of the assistance available, download a copy by clicking here.

Negotiating commercial rent relief

The following information has been compiled with the support of Coraggio Member and (NMAS) Nationally Accredited Meditator, John Christopoulos, Managing Director of RCI Advisory’s.

New South Wales

Businesses across the East Coast are once again faced with extended lockdown periods which are adding significant complications to existing lease and rental arrangements. With nearly all commercial and retail tenants reverting back to full rental in April 2021 in line with the end of JobKeeper, along with the extra burden of repaying deferred rental from 2020, tenants in recent months have been met with a higher rental obligation than pre-COVID.

Now, with businesses in NSW in their 8th week of lockdown, no income, and the outlook of further lockdowns, the question remains “where to from here with rents and lease obligations?”

There have been some major developments for NSW tenants and landlords over the weekend with the re-introduction of the National Cabinet’s Mandatory Code Of Conduct for Commercial Leasing, which mandates rent relief for eligible tenants impacted by the current lockdown.

Prior to this change, there was no obligation on the part of landlords to reduce rents for the current lockdown period which commenced on June 26. This equates to businesses being liable for the full amount of both July & August rent, until this change was introduced. 

As it stands now with the revised legislation, there is now an obligation for rents to be reduced through a combination of rental waivers and deferrals in proportion to the reduction in a business’s revenue. This was the same formula that worked successfully last  year and aided businesses to get through 2020. The Regulation applies to businesses with a turnover of up to $50 million (up from the $5 million threshold that was in place from 1/1/21-31/03/21) and for businesses who qualify for the COVID-19 Microbusiness grant, COVID-19 Business Grant, or JobSaver Payment.

A significant addition to the protections has also come for smaller commercial or retail landlords who will be entitled to a monthly grant of up to $3,000 per month if they provide rental waivers of at least the value of the grant and any land tax relief they are eligible for.

For more information click here.

Victoria

In Victoria, the New Commercial Tenancy Relief Scheme also provides support for businesses, with rent relief for eligible businesses calculated by comparing their turnover for the final quarter of 2020–21 with turnover from the final quarter of 2018–19. The percentage drop will determine the amount of initial rent relief. The Victorian Government will provide land tax relief of up to 25 per cent, in addition to any previous relief, to landlords who provide rent relief to their eligible tenants. Small landlords who can demonstrate acute hardship will be eligible to apply for payments  as part of a $20 million hardship fund. With the Victoria Government still in the process of finalising support measures refer to the relevant link for  updates.

For more information click here.

Queensland

Queensland in 2021 has been least affected by lockdowns across the East Coast, and at this point has no current legislative framework in place when it comes to rent relief. It is no longer mandatory for Landlords to offer rent reductions to tenants. There   however is a provision for businesses to use the “reasonable recovery period” that was specified in the National Mandatory Code of Conduct, as a basis of discussions and negotiations with their landlord if they are one of those industries such as tourism which continues to be seriously affected. During COVID-19, the QLD Government committed to permanently establishing the Queensland Small Business Commissioner (QSBC). It offers dispute assistance and free mediation services until 30th September 2021.

For more information click here.

Overall, the key takeaway and advice for commercial tenants and landlords is that negotiation is your best way to solving rental and lease issues. Most of these issues will not be solved in a court, they require a mix of co-operative, transparent discussions and sharing of information in a way that may not have been done in the past. This is not the time to “put your head in the sand”, you need to understand your obligations under your lease (including personal guarantees) and open that constructive dialogue with your landlord & tenant.

Play the “long game”, no good landlord wants to lose a quality tenant, it is a case of sharing the load and working through to the other side. There is significant angst and distress being experienced by tens of thousands of businesses and no reason that any tenant should be bullied or intimidated. The message is inform your clients, contacts and even your local businesses that there are measures in place to assist and they are not alone. If you know of anyone in a distressed situation, please pass on RCI Advisory’s contact details to provide ongoing advice and support.

Even if your business is travelling as normal and you have a pending lease renewal, remember the market has changed and it pays to be informed regarding movements in market rents, lease conditions and incentives. We are currently negotiating on behalf of tenants with such companies as Westfield, AMP, GPT, Lend Lease as well as small family landlords. Contact John, on 0414 659 139 or alternatively email john@rciadvisory.com.au.

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