Big ASX banks are under enormous pressure to be lenient to small and medium businesses that are struggling with cashflow.
Commonwealth Bank of Australia (ASX: CBA) has announced a number of measures to help small businesses.
It has already passed on the full 0.25% RBA rate cut for business loans. It's also providing additional resourcing and extended hours for commercial lending teams to ensure faster decision times for small business loans.
But it has announced a number of repayment deferrals and waiving fees for small and medium business customers who may be facing financial difficulty.
CBA's repayment and fee waiver assistance
Commonwealth Bank will defer repayments on a variety of business loan and overdraft products, for 90 days.
It's waiving merchant terminal fees for impacted customers with CBA payment terminals for 90 days.
CBA is waiving establishment fees and excess interest on temporary excess products.
Deferring repayments on vehicle and equipment finance loans, and providing tailored restructuring options.
CBA CEO Mr Comyn said: "The Commonwealth Bank recognises the uncertainty as the nation responds to the challenges posed by the coronavirus. Australia has a strong and stable financial system and economy, and we recognise the important role we play to support our customers, our people, our suppliers and the economy. We are assessing the impact on our operations on a daily basis. Our first priority remains at all times the safety and wellbeing of our customers and people. We are taking practical precautions in line with the latest guidance from Federal and State authorities."
CBA to pay suppliers faster
The bank also acknowledged that as a major purchaser of goods and services, it will prioritise payments to small and medium business suppliers. Currently two thirds of its suppliers are on immediate payment terms and it will continue to move more onto immediate payment terms where practical.
Mr Comyn said: "Commonwealth Bank's strong financial position means Australians can have confidence in our ability to support the economy in this period of difficulty, through to a time of recovery."
Foolish takeaway
Treasurer Josh Frydenberg is currently meeting with the Australian Banking Association to discuss the response to the coronavirus and the strength of the economy.
It's good that banks are taking this seriously as it could easily turn into a painful recession if things go wrong. It's good that banks have been increasing their CET1 ratios to become safer during periods like this.
