Recap of banking and finance support available to businesses

There is little doubt Australian business has been adversely impacted by COVID-19 and some worse than others, the entertainment and hospitality industries have likely been impacted the most as they haven’t been able to trade at all.

Many of our clients have commented that they have been able to survive so far on the back of JobKeeper program and by securing additional funding, particularly from government backed options.

We set out below a concise summary of some of those options to help you, rather than you having to wade through government and bank websites.

The Australian Banking Association (ABA) has reported ‘98% of all businesses (including not-for-profits) with a loan from an Australian bank are eligible for help. Assistance that may be available includes debt restructuring, deferral of loan repayments and the waiving of fees and charges.’

The ABA has outlined COVID 19 and JobKeeper support in the form of ‘The Business Relief Package’ designed to:

  • allow businesses adversely impacted by COVID-19 to defer principal and interest repayments for a period of six months with interest capitalised and paid off over the remaining life of the loan;
  • facilitate extension of loans subject to agreement between the business and its bank;
  • providing loans, including overdrafts, at very low interest rates, to help bridge cash flow gaps; and
  • take advantage of the government backed SME Loan Guarantee scheme, no loan repayments will be required for the first six months of the and applies to new loans made until 30 September 2020 – businesses should contact a participating bank to discuss eligibility.

To be eligible, your business must have less than $10 million total debt to all credit providers and be current, and not in arrears as of 1 January 2020. It does not matter how many people you employ. Some banks are applying these criteria flexibly, so if you fall outside please contact your bank to discuss your situation.

In order to participate you must advise your bank that your business (or not-for-profit) is affected by COVID-19 for the approval process to be fast tracked to provide support as soon as possible.

On the ABA’s website, you can find the contact numbers for the banks’ financial hardship teams – see here:
Source: Australian Banking Association <>

The SME Loan Guarantee Scheme mentioned by the ABA is provided by the Australian Government to support business with a business lending initiative. Further information is available from the Treasury website (, which includes the following information.

  • The Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Scheme will guarantee up to $40 billion of new lending to enhance eligible “lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.’
  • The Government will provide eligible lenders with a guarantee for loans with the following terms:
    • Maximum total size of loans of $250,000 per borrower.
    • The loans will be up to three years, with an initial six month repayment holiday.
    • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

Many bank facilities have some form of financial covenants testing in their loan documentation, either in the form of specific financial ratio covenants, or negative pledges which restrict further borrowings but allow some commercial transactions occurring in the ordinary course of business that would otherwise be prohibited.  For example one covenant recently reviewed allowed trade creditors in the ordinary course of business if repaid within 90 days. Liquor licensees buying alcohol on trade terms, that because of social distancing they have been unable to sell, are likely to breach such a covenant and will need to negotiate changes to it with their bankers.

At this time it is important you review these financial covenants and adopt a proactive approach to any likely breaches of those covenants by reviewing your facilities with your bankers and applying for any relief available.

If you need more information on support available please contact your relationship manager or your bank’s hardship hotline. The ABA’s list of the banks’ financial hardship teams is available at

“The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.”
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