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How COVID Regulations Affected Australia’s Lending Market

The Tough coronavirus restrictions have impacted all sectors of the Australian economy, including the lending market. However, it’s now easier for businesses to qualify for a loan than it was before the coronavirus affected the way we all live and work.

The government has announced a number of lending measures to help Australian businesses to get the funds they need. These measures include:

  • The Coronavirus SME Guarantee Scheme

Under this Scheme, the federal government will provide a 50% guarantee to lenders to support new, short-term unsecured loans to SMEs (small to medium-sized businesses). This Scheme is designed to encourage lending by Australian financial institutions.

In addition, the government has introduced a temporary exemption from the responsible lending obligations that lenders have to SMEs. This means that lenders are currently able to reduce their lending restrictions.

  • The Reserve Bank introducing a low-interest funding facility for SME loans

The Reserve Bank is providing low-interest funding to financial institutions to encourage SME lending. In addition, they have cut the cash rate to just 0.25%. Interest rates in Australia are currently at Record Lows, and the expected economic fallout of the coronavirus (COVID-19) restrictions means that they are unlikely to rise any time soon.

In addition, the government has also announced an increase in the Instant Asset Write-off Threshold for businesses. This means that businesses can claim increased tax deductions for assets that they buy, like vehicles and equipment. Previously, businesses were only able to write-off assets up to the value of $30,000. This threshold has been increased to $150,000 for this current financial year (which ends on June 30).

So, if your business wants to take advantage of the more relaxed business lending environment and get some more tax-deductible assets, now could be a good time to borrow if you’re confident you’ll have the cash flow to make your repayments.

If you want to buy assets that cost more than the instant asset write-off threshold amount ($150,000), the government has also announced accelerated depreciation deductions up until the end of the 2020/2021 financial year. You’ll be able to deduct 50% of the cost of the asset in its first year, meaning that your business will pay less tax.

Again, taking advantage of this government incentive may allow you to invest in assets that will help you to grow your business once the coronavirus restrictions are lifted.

How we can help

At ARG Finance, our experienced team of finance and mortgage brokers can help you to source the right Commercial And Business Loan for your needs. We can also help you with:

We’ll take the time to understand your individual situation so we can provide you with the right loan and lender for your needs. We arrange loans from our panel of over 30 lenders across Australia, saving you time and hassle. Best of all, our service is free!

Contact us today for an obligation-free chat to find out how we can help you!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.