Australian banks offer business loan relief, govt readies coronavirus stimulus

SYDNEY: Australian banks said on Friday they will defer loan repayments for small businesses impacted by coronavirus for six months, as the government prepared to dramatically expand its stimulus package to shelter the economy from the impact of the pandemic.

The spread of coronavirus around the world has threatened the viability of many companies, but small businesses with limited cash on hand are expected to bear the brunt of the collapse in consumer spending, risking massive job losses.

To help such customers through the crisis, Australia’s banks said they would defer loan repayments for small businesses for six months at a cost of A$8 billion ($4.7 billion).

“We want to get it out to as many businesses as quickly as possible so they can keep their doors open and keep employing Australians,” Anna Bligh, chief executive officer of the Australian Banking Association (ABA) told reporters in Sydney.

Australian banks have about A$100 billion worth of loans outstanding to small businesses, the ABA said.

The loan relief came as the government signaled it would announce further stimulus spending on the weekend, and as the number of coronavirus cases in the country rose about 20% from a day earlier to nearly 700, with seven deaths.

The size of the package is still be determined, but Australian media reported it could be worth around 3%-4% of Australia’s A$2 trillion economy, or up to A$80 billion.

Treasurer Josh Frydenberg only last week announced stimulus spending worth A$17.6 billion to stop the country slipping into its first recession in nearly 30 years.

“The package is still being finalised – it will be unveiled over the weekend,” one government source told Reuters.

Frydenberg declined to comment on the size of the package, but said the new stimulus would target those most impacted by the flu-like virus.

“This second package is more about cushioning the blow for those Australians who may find themselves out of work,” Frydenberg told the Australian Broadcasting Corporation.