The Prime Minister has called on banks to “step up to the mark” and reduce the lags in processing and offering bridging finance for businesses.
Speaking during a press conference on Thursday (23 April), Prime Minister Scott Morrison provided an update on the JobSeeker and JobKeeper packages, outlining that 587,686 JobSeeker applications have been received so far – “more than we do in a year”.
Moreover, it was revealed that more than 900,000 businesses have registered their interest for JobKeeper payments and 275,000 businesses have made formal applications. Among these are financial services companies.
However, Mr Morrison noted that while these economic packages have been released to help businesses and employees survive the COVID-19 pandemic, he called on the banks to “step up” too to ensure that these SMEs are able to pay workers while they wait for the government's $1,500 wage subsidy.
The subsidies are expected to be paid from early May.
The Prime Minister said: “For these arrangements to work, we need the continued, strong cooperation from the banking sector and for the superannuation sector.”
He said: “I am aware that there has been some frustration, among some businesses, in particular, in accessing bridging finance with banks. We are aware of that. I have no doubt that banks are aware of that. And we need to be addressing that.
“Early on in this crisis, the banks' decision to pass on the cash rate reductions and provide deferments and waivers of various arrangements for businesses and individuals is very much welcome. But that needs to be continued,” he said.
“It’s important the banks step up to the mark here.”
Indeed, Mr Morrison said he was “concerned at the increasing number of stories we’re getting” regarding this access to bridging finance and the times taken to process applications.
“We need those turnaround times to improve,” he said, noting that many banks will already know the small-business customers applying for the finance (suggesting that processing should be taking less time than it is).
“These banks know these businesses… So, they know their history. They know their trading performance. They know what they’re capable of doing."
He added: “They have to stand by these businesses in their time of greatest need… and that is now.”
Indeed, according to Momentum Intelligence's Broker Pulse survey for March, brokers who write business loans are seeing turnaround times blow out at a faster rate than those writing residential mortgages (though these are also extending at the major banks). This is particularly the case for those who write business loans with the major banks. According to the March edition of the Broker Pulse survey, turnaround times for business loans at the majors was around 13.5 days in the March quarter - up from 10.5 days in the previous quarter.
In a move to help SMEs access working capital to help them survive the coronavirus pandemic, the government has launched a new Coronavirus SME Guarantee Scheme.
Under the scheme, the government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
It aims to “enhance lenders’ willingness and ability to provide credit to SMEs” and can support up to $40 billion of lending to SMEs (with the government guaranteeing up to $20 billion).
Mr Morrison also revealed that the Treasurer has been working closely with the banks and met with them last night and again today – a new hotline has been agreed on to deal with the issue.
More to come.
[Related: NAB receives 50,000 loan relief requests]