Earlier this month the RBA cut the official cash rate by 25 basis points to a new record low of 0.50% due to the impact of the coronavirus outbreak on global financial markets.
And as the economic ripple effects of the coronavirus start to hit Australian businesses, financial and consumer law firm MyCRA Lawyers says the repercussions of not meeting loan repayments in a timely fashion could impact businesses for five years.
“The risk of an extended and prolonged economic downturn is real and affecting the entire economy,” says MyCRA Lawyer’s CEO Graham Doessel.
“The problem is even though the tourists and customers may have stopped, the bills won’t stop and that can mean defaults on people’s credit files.”
Mr Doessel says as soon as you are 14 days or more late in making a loan repayment it can go on your comprehensive credit file for two years.
“This will impact your ability to access credit,” Mr Doessel says.
“[If you] get a default or a court judgement on your file you will be feeling the financial symptoms of coronavirus for five years.”
Mr Doessel says if your business is struggling to meet its bills you should contact your creditors straight away and apply for hardship.
“Most lenders have a positive obligation to offer hardship in genuine cases. If you have seen your cash flow decimated due to coronavirus, reach out to your creditors and ask for some breathing room,” Mr Doessel says.
“Whatever you do, do not stick your head in the sand, because you can’t hide from your financial obligations.”
Mr Doessel adds that lenders and companies like Telstra, Optus, AGL and Origin Energy have hardship policies for genuine victims of circumstances beyond their control.
“Anyone who finds themselves financially affected by the virus should make a list of their bills and contact each credit provider – in writing if possible – to let them know the circumstances and to check no bills have gone unpaid,” he said.
“Most companies have the discretion to forgive a debt in extreme cases.”
The coronavirus outbreak comes as many Australian businesses are still reeling from bushfires.
Indeed, a NAB survey has found that two-thirds of Australian SMEs have been directly or indirectly impacted by the recent bushfires, with business disruption, higher insurance, and lower customer confidence cited as key factors.
“We know that many families and businesses face an uncertain future and we recognise the significant impact the fires have had on cash flow, loss of customers and supplier disruption,” says NAB Chief Customer Officer of Business and Private Banking Anthony Healy.
There’s no doubt many Australian businesses are doing it tough right now – whether that’s because of the coronavirus outbreak or the summer bushfires.
If yours is one of them, please get in touch. We’re ready to assist you in any way we can and will work through your available options with you.
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