Lending during COVID-19

By on June 3, 2020

MILES BEAMISH, Partner Equipment Finance (VIC) for Finlease provides an update on Lending in these times of COVID-19 (Associate member of the CMPA since 2015).

In these extraordinary times for all of us we believe it is important to keep you updated with the most relevant and recent development in the financing landscape.

In particular we want to alert you to the potential difficulties facing many clients at the moment who have entered into or requested COVID-19 deferred payment relief from any of their financiers.

There are many valid reasons for entering into these arrangements, none more so than the immediate closure of your business and many others have also taken the option to defer to conserve cash flow or simply to take the offer up because it was there.

It is becoming increasingly obvious that many of the major banks and finance companies are asking this question up front on any new finance applications received for plant and equipment, vehicles or any other assets and are essentially declining the application for any business on these deferred payment plans – irrespective of the reasons and transparency with provided financial information etc to mitigate.

We see this current stance being taken by these lenders as completely out of step with the intent of the deferred payment program initiative advanced by the Federal Government and supported by the Australian Bankers Association (ABA).

Whilst we are working hard to advocate through our representative body (CAFBA) with both the Federal Government and the banks (ABA) to have this stance reconsidered, we strongly caution all of our clients and valued partners to consider the following especially if looking to potentially finance pre June 30 to take advantage of the generous $150K instant write off;

  • If you have not yet entered into a deferred arrangement but are thinking of doing so please consider carefully and discuss with your accountant – by entering into deferred payments you may adversely prejudice your ability to seek competitive finance from the market over the short /medium term.
  • If you have already taken up the offer of deferred payments consider your ability to “catch up” and repay the missed payments and withdraw from the payment plan(s) to increase the breadth of funders that will consider additional finance for your business over the short/medium term.

Please also bear in mind that if you seek to withdraw from a deferred payment arrangement already in place/requested you may also be asked by the financiers to waive the right to subsequently seek another deferred payment option through the remainder of the 6 month deferred payment ‘’window’’ period ending September 30 2020.

I am available on 0410 774 506 and welcome any calls to discuss your particular circumstances further and better plan especially for any pre-June 30 purchases requiring finance.

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