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The Roundup and COVID-19

Writer's picture: Justin CornockJustin Cornock



I hope this finds you all well and safe.

COVID-19 and the raft of additional Stimulus measures inbound this week just past. Have been nothing short of Megalithic.

Many of the measures announced are yet to be clarified and disseminated to us as to how this will all work.

Especially in the way that the Interest free, interest only business loans will be made available. Official word has not yet been delivered. However in discussion with some of the Bank relationship managers I am close to it is likely that the loans will look a little like this.

We do know that the Govt will guarantee 50% of the loan, with the lender providing the rest. All of these loans will likely be via a traditional application process with a traditional assessment method in the business’ ability to service the debt over the term which looks like it could be up to 3 years.

So while it could be up to $250,000 available per loan this will obviously not be available for everyone. The information on the relaxation in responsible lending is that the govt will provide an exemption for 6 months for lenders to extend this to their ‘Existing’ small business clients. It is yet to be seen how this will work in reality.

I think we will receive advice on all of this over the coming week or two.

Other than stimulus the RBA’s out of cycle rate cut possibly has nearly been missed. CBA certainly on the front foot here slashing their fixed rates to 2.29% on two and three year fixed NAB also announcing the same for their 2 and 3 yr fixed with a first home buyer special of 2.19% 2 yr fixed. ANZ likewise with 2.19 on a 2 year fixed with their breakfree package.

How COVID-19 will affect the economic landscape with non essential services being shut down, is yet to be realised. Along with pubs and clubs shutting down, the long term effects to the housing market, as well as those thousands of casual employee’s being stood down many of them with no warning. It is surely a testing trying time for all affected and my thoughts are with them.

I think we are in for a rough ride in the coming weeks and months, the only thing that any of us can really do is sit tight and weather the storm as best as we can.

As soon as more information comes to light around the unsecured business loans I will send out another roundup.

Most lenders have already released their amendments to policy around dealing with stressed mortgage clients, I think we may even see some empathy from lenders here.

The biggest change noted in much of this is the way that nearly all lenders have adjusted their policy to face to face meetings with clients now being made available via technology.

I hope all of you remain safe and well.

I am still working albeit from home. I have already taken a significant amount of calls from clients who are already looking for assistance in this turbulent time.

If you need assistance I will always do everything I can to help.

JC

Scenarios and interest rates quoted above are suggestions and constitute general advice only.


Justin





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