COVID-19 Loan Deferrals – Your Questions Answered
There’s been lots of information in the media about lenders offering mortgage repayment relief, however the assistance available for SME’s with equipment finance loans hasn’t received much coverage.
As a result, our phones are ringing hot, so we wanted to share some answers to the frequently asked questions the QPF brokers have received over the last week.
What assistance is available for small businesses in relation to equipment finance contracts?
Major Banks: The major banks will defer loan repayments for up to six months for small businesses who need assistance because of COVID-19.
Non-bank Lenders: The other non-bank lenders on our panel are offering a range of support on a case-by-case basis, with some offering repayment deferrals, reduced repayments or restructuring of loans. Other assistance can include fees waived, debt consolidation, and further credit offered to get through the pandemic.
How do I apply for this assistance?
Each of the banks and the non-bank lenders have a process to apply for assistance. These processes are changing as funders try to deal with the growing number of requests. Some of the processes can be completed by your broker on your behalf, others require you to liaise directly with the funder. Your QPF Broker is across all of these processes and is well placed to guide you.
Will I be charged interest during a repayment deferral period?
This will vary from lender to lender, however most lenders will continue to charge interest during any repayment deferral period. Lenders provide different options when it comes to covering the interest cost of deferrals once clients are back on track, including loan terms being extended so repayments don’t increase or monthly repayments being adjusted over an agreed period of time.
If I defer my repayments will it affect my credit rating?
Banks and some non-bank lenders report your repayment history to credit bureaus. Any change to your loan structure or repayments may be recorded on your credit history, but lenders and credit bureaus are working together to ensure that reporting is fair to customers and takes COVID-19 into account. We have also been advised by a number of lenders that repayment deferrals will not negatively affect your credit rating if your loans were up-to-date at the time of requesting the deferral.
What about my other loans like my credit cards and my mortgage?
Most lenders are offering a three month deferral of home loan repayments, with a further three month extension available on review. Lenders have suggested the most efficient way to apply for this relief is via the link on their website.
For commercial mortgages the banks have recommended clients contact their Relationship Manager for tailored assistance packages. Should clients experience any difficulties with this process, please contact your QPF Mortgage Broker for assistance.
Can a business borrow money at this time?
Yes. Banks are still offering loans at very low interest rates, non-bank lenders are also still open for new business. In some instances the lending criteria may have changed and certain affected industries may not be eligible for all products or may need to supply additional information. Again your QPF Broker is up-to-date with these changes and is ready to help you navigate this new landscape.