The Australian Banking Association has today revealed the part it will play in supporting the Government's 'hibernation' plan for businesses, however commercial landlords need to note the catch.
A business with total business loan facilities with an Australian bank of up to $10 million will be able to defer repayments for loans attached to their business for six months. However, commercial landlords seeking to take advantage of the deferment will need to provide an undertaking to the bank that, for the period of deferment, they will not terminate leases or evict current tenants for rental arrears as a result of the COVID-19 pandemic.
In addition, to be eligible for deferment, the customer's business must be affected by the COVID-19 outbreak, they must be current in terms of existing facilities 90 days prior to applying, and interest will be capitalised, which means either the term of the loan will be extended or repayments will increase once the deferral period ends.
In the retail leasing space, Bills have been passed in a number of States enabling regulations to be made to restrict a landlord's right to terminate a lease and recover arrears. We await release of the regulations which will detail exactly how these restrictions will apply.
We will keep you up to date with further developments.