Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Suncorp updates SME loan terms

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

sme logo

Suncorp updates SME loan terms

loan application  loan application
Tas Bindi 3 minute read

The non-major bank has made changes to its small business loan terms in a bid to make them “fairer”, while also announcing the launch of a new calculator for SME loan applications.

Suncorp has announced changes to its small business contract terms and conditions affecting new and existing customers with lending contracts valued at $1 million or less.

Advertisement
Advertisement

In a bid to make the contract terms “fairer”, the bank removed the clause that previously allowed it to treat a loan as being in default due to a general or non-specified “material adverse change”.

However, there are exceptions, such as failing to pay or exceeding a facility limit, becoming insolvent, misrepresenting information, committing unlawful acts, being the subject of material creditor enforcement, losing a licence or permit, failing to maintain insurance, and changing ownership. In such cases, Suncorp will be able to treat the loans as being in default.

The clause remains in place for loans valued at more than $1 million.

Further, using financial indicator covenants as default events will no longer apply, meaning that if, for example, the value of a customer’s secured property falls, but they are still able to maintain their repayments, they will not be in default of their loan. However, exceptions apply.

Additionally, Suncorp said it will no longer rely on indemnities in contracts to claim losses that could be caused by fraud, negligence or misconduct by the bank’s employees, contractors, agents, and third parties appointed by the bank to exercise its rights as the holder of a security.

The bank has also said it reduced its ability to make changes to loan contracts at any time without the customer’s agreement. Customers will also be provided extra notice in many cases, according to Suncorp.

Australia’s big four banks were required to make these changes first, after a joint investigation by the Australian Securities and Investments Commission (ASIC) and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) found that they “had not done enough” to bring small business loan contracts in compliance with amendments to the Australian Consumer Law in November 2016, which extended consumer protections to small business loan contracts of up to $1 million.

A spokesperson from ASIC told The Adviser sister title Mortgage Business that the regulator had sent communications to a wide range of bank and non-bank lenders in April and May as part of its continued efforts to ensure the industry is compliant with amendments to the Australian Consumer Law.

Suncorp additionally announced the launch of a new small business capacity-to-repay (CTR) calculator that it said is “streamlined and easier to use”.

The bank said the calculator, which can be accessed by logging into Suncorp’s Business Partners Online platform, was designed specifically with brokers in mind.

The new CTR calculator can be used for small business and combined small business/residential loan applications, or for existing small business customers looking to obtain residential loans.

[Related: Regulator warns SMEs to check bank loan contracts]

Suncorp updates SME loan terms
loan application
TheAdviser logo
loan application
Tas Bindi

Tas Bindi

Tas Bindi is the features editor for The Adviser magazine. She writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.  

Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business. 

You can email Tas on: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

FROM THE WEB
more from the adviser
Bank introduces review period for broker commissions

A lender has announced that it will alter the manner in which it ...

Risks flagged amid lending policy changes

An industry association has issued a warning over the “unintend...

Broker urges banks to accept APRA reforms

A Perth-based mortgage broker has called on banks to green-light ...