Australia’s major banks will fast-track “bridging finance” for small businesses struggling to pay their workers ahead of receiving JobKeeper payments under an agreement struck between the federal government, lenders and the tax office.
Treasurer Josh Frydenberg announced on Thursday Australia’s four largest banks will establish “dedicated hotlines” for SMEs to apply for wage loans, following widespread criticism many businesses can’t front up the cash to keep workers on before wage subsidy payments start flowing in early-May.
Under JobKeeper arrangements passed through parliament several weeks ago, businesses must have paid workers at least the minimum $1,5000 fortnightly wage subsidy payments throughout April in order to be eligible for JobKeeper reimbursements.
But many businesses unable to afford wages have stood down workers or reduced staff hours in the wake of the COVID-19 pandemic, meaning they will not be eligible to apply for JobKeeper payments for those periods.
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“If you are a business or a not-for-profit operation that is eligible for the JobKeeper payment, as required, you need to pay your staff ahead of receiving the money from the tax office,” Frydenberg told reporters in Canberra on Thursday morning.
“Go to your bank, ring their hotline, ask for that support, and that support will be forthcoming.”
The Treasurer held a telephone conference with the chief executives of Commonwealth Bank, National Australia Bank, Westpac, ANZ and tax commissioner Chris Jordan on Thursday morning to nut out the bridging finance plan.
But the Treasurer provided no detail about what the terms of the finance arrangements will be, or how long it will take banks to process applications beyond priority service.
“[Banks] have also agreed to expedite the processing of all those applications to the front of the queue,” Frydenberg said.
“The banks, they know their customers, and they want to work with their customers as we want to work with the Australian businesses to ensure that they get their payments under the JobKeeper program,” he said.
More than 275,000 businesses have filed formal JobKeeper applications since enrollments opened on Monday, about half of which are sole traders.
Banks later confirmed bridging finance would run along the same lines as unsecured loans announced by the major banks in late-March, but these requests will now be expedited.
NAB chief executive Ross McEwan said his bank will also fast-track all COVID-19-related small business loan requests.
“We recognise this funding is critical to keeping businesses afloat, people in jobs, and food on the table for the many people who are doing it tough right now,” he said in an emailed statement.
Commonwealth Bank also confirmed all COVID-19 unsecured loan applications would be fast-tracked under the deal reached with Frydenberg and the ATO.
Guil Lima, chief executive of Westpac’s business division, said the bank “strongly supports” the JobKeeper program and would be launching a hotline soon.
“Following discussions with the government today we have agreed to put some additional measures in place to help businesses who need bridging finance while they wait for JobKeeper payments to come through,” Lima said in an emailed statement.
“One of our immediate priorities is to set up a dedicated hotline for our customers to use and ensure we expedite those requests.”
ANZ said it will identify which of its customers need JobKeeper bridging finance and prioritise those requests until ATO payments begin to flow in early-May.
“This is a challenging time for some of our business customers as they try to make ends meet while supporting their staff members and their businesses,” chief executive Shayne Elliott said in a statement.
None of the banks provided estimated timelines for bridging loan applications, but SMEs unable to meet their wage payments will need to pay staff before April 30 in order to be eligible for reimbursements covering JobKeeper pay periods in that month.
Political pressure is building on the banks to play ball, however, with Home Affairs Minister Peter Dutton calling on financial institutions to be publicly shamed if they’re unable to provide the funds in time.
We’ve put in place a regime where they can offer that finance and they should,” Dutton told Nine’s Today show on Friday morning.
“We need to look at the cases where they’re not, and frankly, I think the banks should be publicly shamed.”