Lenders begin contacting borrowers who have deferred loans

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If you’ve deferred your home or business loan then it’s likely your bank will reach out to you in the coming weeks. Here’s what to expect and what options are available to you.

As the initial wave of six-month loan payment deferrals comes to an end, banks have started contacting customers to discuss the next step, which could include further support, assistance or deferral.

Of the more than 900,000 loans which have been deferred during the pandemic, at least 450,000 borrowers will be contacted as they approach the end of their loan deferral in September and October.

That includes 260,000 mortgages and more than 105,000 business loan deferrals to small and medium businesses that will be assessed.

The important thing to know is this: you have options

No one likes to be caught flat-footed. And if you’ve deferred your loan, the last six months have understandably been quite a stressful period.

Rest assured, however, that there are a range of options we can help you consider before the bank phones to see if you can resume your pre-covid loan repayments.

Those options include:

– switching to interest-only repayments for a period of time
– renegotiating your rate with your current lender
– refinancing to another lender
– debt consolidation, or
– a combination of these and other measures.

And if none of the above options are feasible right now you can seek a further four-month deferral with your lender – but at least you’ll know that you’ve fully explored the other potential avenues first.

We’re here for you

If you’d like to explore some of the above options before your lender contacts you then please feel free to get in touch today.

We’re here to help you with your loan any way we can – whether that be deferring, refinancing, or renegotiating.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

3 questions SME owners should ask themselves before JobKeeper 2.0

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JobKeeper is due for a big shake-up next month, which means if you’ve been relying on it to get your business through these rocky times, you need to start planning ahead now.

With the small business ombudsman and many economists concerned about an “insolvency tsunami” hitting small businesses, it’s critical that you start thinking about your ongoing funding plans now to avoid being swept up in the tide.

JobKeeper support is set to end for many businesses on September 27, while it will continue for other eligible businesses under a reduced amount until March 28.

So with that in mind, you may want to start assessing your business’s ability to make loan repayments, pay staff without JobKeeper support, take care of ATO debts, as well as any other financial obligations.

So, what are the big 3 questions?

Businesses that have been drawing on JobKeeper should start asking the below three questions, says Wayne Smith, Group Executive of SME lender Scottish Pacific.

1. What support will I lose, and has my business got the cash available to replace it?

2. What payments will I have to make from October or March that I’m not making now?

3. Do I have any pressing creditors ready and able to take action against me once they are able to?

Why these questions are so important

The unfortunate fact is that over the coming months many businesses will have a funding gap and have to face some very tough decisions.

“Your answers to (the above) questions will guide whether you seek extra funding or make a tough call on your business,” Mr Smith says.

“You don’t want the business to accumulate debt if it’s not going to be viable.”

Mr Smith says businesses can consider seeking rent reductions, JobKeeper, government grants, and ATO deferments.

“These initiatives have helped many businesses hibernate or trade through the tough times. However it’s important to consider how this will pan out when commercial evictions for non-payment of rent return, and creditors are able to present winding up petitions,” Mr Smith adds.

Financing options you may consider

It’s important to note that the federal government’s Coronavirus SME Guarantee Scheme is being extended, with the initiative allowing lenders to provide eligible SMEs unsecured loans “more cheaply and more freely”.

Mr Smith says another option business owners could consider is Invoice Finance, which makes use of assets already in the business rather than using the family home for security.

“Put simply, using Invoice Finance brings forward payment of your invoices so you have cash in hand. You get 80% paid earlier, and the remainder later,” Mr Smith says.

Now may also be a good time to consider whether your business could benefit from a self-liquidating revolving line of credit facility, says Mr Smith, rather than further exposing yourself by taking on more loan repayments.

Get in touch

As mentioned earlier, if you think you might have a funding gap in your business, it’s good to act in advance – not when you’re scrambling to make ends meet.

So if you’d like to explore some funding options for your business please get in touch today – we’re here to help your business however we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Coronavirus SME Guarantee Scheme is being expanded

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If you’re a small or medium-sized business owner in need of an affordable loan then we’ve got good news: the federal government is expanding the Coronavirus SME Guarantee Scheme to allow businesses to borrow more and for a wider range of purposes.

The scheme, which is in phase one until September 30, allows lenders to provide eligible SMEs unsecured loans of up to $250,000 for up to three-year terms.

It’s got pretty good traction too, with more than 15,600 businesses accepting loans worth $1.5 billion to date.

As such, phase two has just been announced to further assist Australia’s economic recovery from coronavirus.

Hold up. What’s this scheme all about?

The Coronavirus SME Guarantee Scheme basically involves the government guaranteeing 50% of each new loan issued to SMEs by eligible lenders.

This allows lenders to offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association (ABA).

What’s changing?

In a nutshell: SME Guarantee loans will soon be larger, longer-term and for a wider range of purposes.

The second phase of the scheme will kick off on 1 October 2020 and will be available until 30 June 2021. Here are the key changes taking place:

– Loans can be for a wider range of investment, beyond working capital
– Secured lending now permitted (excludes commercial or residential property)
– Maximum loan size increased to $1 million (up from $250,000 per borrower)
– Maximum loan term now five years (up from three years)
– Lenders can now offer a repayment deferral period.

How do I apply?

This is where it can get a little confusing: the federal government has approved 44 lenders to participate in the scheme, which is a lot to choose from.

Fortunately, we can sit down with you and look at your business’s financing needs to help make your decision easier.

So if you’d like to discuss your eligibility and any other details of the scheme, get in touch today – we’re here to help you work through it.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How to smooth out your business’s insurance and workers comp premiums

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Getting a bill in the mail is never pleasant, but your annual insurance and workers compensation premiums can be particularly tough lump sums to swallow. There is, however, an affordable financing option that can limit the impact on your business’s cash flow. Let’s take a look.

Most businesses have expensive annual insurance premiums to pay, whether they be for professional indemnity insurance, product liability insurance, public liability insurance, or any other general business insurance policy.

Throw your workers compensation premiums into the mix and these obligations can become quite the annual financial hurdle to overcome.

Fortunately, a financing option exists that can smooth out your cash flow headache and help you become eligible for an early bird discount on your workers compensation premium.

Insurance Premium Funding (IPF)

IPF allows you to split your insurance payments into manageable, affordable, monthly amounts that won’t cripple your cash-flow like an annual lump sum payment can.

Basically, any business that has an insurance premium of more than $5,000 has the ability to use IPF if they need to.

The insurance premiums are normally financed over 8 to 10 months to ensure the premium is fully paid before its renewal, and there is generally no security required with IPF.

Workers comp early bird payment discount due soon

One insurance premium that IPF is commonly used for is workers compensation.

That’s because in some states (including NSW, Victoria and Queensland), employers who pay their annual premium in full are entitled to a 3% to 5% early bird discount.

But here’s the catch: workers comp premiums need to be paid in full before the early bird due date (typically around August/September) in order to receive the discount.

By using IPF to make this payment upfront you can secure the early bird discount, which helps to offset the cost of IPF.

Taking this option will also improve your business’s cash flow, allowing you to redirect capital into income-generating investments.

Find out more

If you’d like to find out more about IPF then get in touch today – especially if you want to be eligible for the workers compensation early bird discount. We’re here to help your business any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

SMEs get instant asset write-off extension, but EOFY deadline looms

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Great news for small business owners: the federal government has extended the $150,000 instant asset write-off to 31 December 2020, but you’ll need to act asap if you want to make use of the scheme this financial year.

A few months back, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a staggering $150,000 as part of its economic stimulus package.

Under the expanded scheme, businesses with an annual turnover of less than $500 million can immediately write off the cost of new or second-hand assets such as food vans, tools, equipment and – thanks to the recent threshold increase – heavier vehicles such as trucks, tractors, and machinery.

Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.

Why the extension?

Under the scheme, an asset must be installed and ready to use by the deadline (previously June 30) in order to be eligible.

So, by giving a six-month extension (to December 31) the government is giving under-the-pump businesses around the country “additional time to acquire and install assets” – which essentially means a little more breathing room.

There’s still time this financial year

All that said, there’s still time to make the most of the scheme this financial year.

By doing so, you can immediately claim all the tax deductions you would have claimed over the life of the asset.

This can help with your business’s cash flow, as getting the cash back sooner means you can re-inject it straight back into other parts of your business.

So if you’d like help obtaining finance before the June 30 EOFY deadline, please get in touch.

We can present you with financing options for the instant asset write-off scheme that are well suited to your business’s needs now, and into the future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.