You may get behind on your business loans because of the bushfires. This can be stressful. There are steps you can take to make repayment arrangements
Is your business still viable?
Can your business recover?
You may need to work out whether your business is still viable. You can do this by:
Talking to your accountant
Can’t pay my business loan
Step 1 Work out what you can afford to pay
If you’re struggling to make the required repayments on a loan or a lease, the first thing to do is work out what you can actually afford to pay.
If you can afford to pay something
Start paying the amount you can afford and then contact your lender to make a repayment arrangement.
If you can’t afford to pay anything
Call us on 1800 413 828 for advice.
Can your business recover? Will you need to close?
- If you need help to work out if your business can recover speak to your accountant or use the Australian Taxation Office’s business viability assessment tool
- If you may need to close your business, your approach to debt payments may change. Get advice on the best plan for your business
- If you are a company you must not trade while insolvent. If you are unsure get legal advice and/or get advice from your accountant.
Step 2 Contact your lender
You can call, write to or email the lender letting them know you have been affected by the bushfires and cannot afford your repayments. Do not be afraid to call your lender. The lender will be aware of the bushfire crisis and they should respond compassionately when you contact them. Do tell the lender that you want to make a repayment arrangement.
Ask about any special assistance your lender is providing as a result of the bushfires.
Keep details of how and when you told the lender you were in financial hardship
if your lender is a bank, they must give you 30 days’ notice in writing before starting any legal action.
Step 3 All loans are not equal
Some business loans are a higher priority for payment than others. For example, large loans secured over your home may be a higher priority than a business credit card debt. If you are not sure what debts to prioritise, call us for advice.
Some loans, including overdrafts, for example, are “on demand” facilities This means they are repayable on demand i.e. when the lender demands that the loan is repaid. The lender can demand that the whole amount be repaid for any reason at any time. However, banks must give 30 days’ notice before enforcing a small business debt (Banking Code of Practice).
Step 4 When speaking to your lender
You should continue to pay what you can afford during negotiations.
If the lender says yes to a repayment plan you offer, this means that a repayment arrangement is agreed and in place. Your contract has been varied.
If the lender refuses to accept the repayment plan you offer, then ask for reasons why.
Step 5 If you make a repayment arrangement stick to it
If your lender agrees to the repayment arrangement, do your best to stick to the repayments.
- Make the agreed repayments on the agreed date
- If you start struggling to make the repayments contact your lender again to talk about your situation
- If it is taking longer than you planned to get back to the normal required payments, talk to your lender about extending the repayment arrangement
Step 6 If the lender will not agree you may be able to dispute it for free
Most business lenders are members of the Australian Financial Complaints Authority (AFCA). AFCA is a free dispute resolution service. Some business lenders must by law be a member of AFCA and some business lenders are members of AFCA voluntarily.
You can check if your business lender is a member at www.afca.org.au/find-a-financial-firm.
When you lodge a complaint with AFCA, the lender must stop all enforcement action. Your lender has 21 days to respond to your original request for a repayment arrangement.
You can make a complaint to AFCA at www.afca.org.au.
If your business lender is not a member of AFCA call us for advice on 1800 413 828.
Step 7 Speak to one of our financial counsellors
If your problem still hasn’t been solved, or you’re feeling overwhelmed, call us on 1800 413 828 to speak with one of our small business financial counsellors.
Warning: This is for information only. Do not rely on it as legal advice. It is recommended that you seek specific advice on your own situation.