Coronavirus: business wins more loan relief in dramatic bailout expansion

A multibillion-dollar bailout of corporate Australia will be included in a third stimulus package.

In a bid to prevent foreign investors from raiding Australian-owned businesses, Josh Fydenberg has said all proposed foreign investments into Australia would now require approval. Picture: David Geraghty

A multibillion-dollar bailout of corporate Australia — including loan extensions and partial government takeovers — will be included in a third stimulus package to keep tens of thousands of people employed during the pandemic, as the commonwealth launches a blockade of foreign raids on struggling Australian companies.

As Scott Morrison prepares to unveil his government’s third and biggest economic rescue package, the banks have agreed to extend the six-month deferral of loan ­repayments to 30,000 businesses, taking the overall value of loans for coronavirus support to $250bn.

The Australian understands the Morrison government will also lift the 50 per cent loan guarantee offered to small and medium businesses to include big employers.

The extension of the loan repayment holidays and potential bailouts to the big end of town — which represents the greatest risk of economic collapse and job losses — is a significant escalation of the government’s fiscal response to the COVID-19 outbreak.

Josh Frydenberg has also moved to prevent foreign companies, including Chinese enterprises, from raiding Australian-owned businesses by reducing ownership thresholds that trigger government scrutiny to zero.

The Treasurer said all proposed foreign investments into Australia would now require approval “regardless of value or the nature of the foreign investor”.

“The temporary change will be achieved by reducing to $0 the monetary screening thresholds for all foreign investments,” he said.

The major banks will on Monday ­announce that loan repayments for almost all Australian businesses will be deferred to protect hundreds of thousands of jobs during the COVID-19 crisis.

Businesses with total loans of up to $10m will be able to defer their loan repayments.

And in another dramatic measure, commercial property landlords will be forced to refrain from terminating leases and evicting tenants who are behind on their rent as a result of the sudden economic downturn.

NAB chief executive Ross McEwan also revealed more than 200,000 customers had reached out to NAB in the past week “looking for help”, forcing the bank to dramatically increase the number of staff in its call centres. The Prime Minister on Sunday confirmed the government was working to support hundreds of thousands of Australians who had been stood down from their jobs.

Mr Morrison, who will use a meeting of cabinet’s expenditure review committee on Monday to finalise the government’s third rescue package, urged employers to wait until the government released its wage-subsidy program and other measures, and stressed the importance of keeping staff “connected to their businesses”.

He said national cabinet on Sunday had agreed that states and territories would move to put a moratorium on evictions of individuals and businesses as a result of the unforeseen financial stress.

“There would be a moratorium on evictions for the next six months under those rental arrangements,” Mr Morrison said.

Australian Banking Association chief executive Anna Bligh has said relief package expansions include extra cash for almost half a million businesses. Picture: AAP

Also on Monday, the Australian Banking Association will ­announce expanded assistance measures that will build on its small-business relief package released earlier this month.

ABA chief executive Anna Bligh said support from the banks now extended to 98 per cent of all businesses with a loan from an Australian bank.

Ms Bligh said the expansion of the relief package would apply to an additional $100bn of business loans, which, combined with existing measures, would mean the six-month deferral of loan payments would now apply to up to $250bn worth of loans, making extra cash available to 425,000 business.

“Banks are expanding their support to an extra 30,000 businesses by raising the threshold of those who qualify for the six-month deferral of loan repayments from $3m to up to $10m in total loan facilities,” Ms Bligh said.

“The type of businesses this ­applies to includes commercial landlords of properties such as local shopping centres, pubs, clubs and restaurants, who must agree not to terminate leases or evict current tenants for rent arrears due to COVID-19 in order to ­access the support.

“This will help protect many more thousands of small businesses from being evicted if they are struggling to pay the rent, as it ­covers approximately 90 per cent of commercial property owners who have loans with an Australian bank. Where landlords within this threshold do the right thing by their tenants, banks will do the right thing by them.”

Businesses with total loans of more than $10m will have their ­eligibility for relief considered on a “case-by-case basis”.

Ms Bligh said the banks had developed the relief package — which is subject to final authorisation by the Australian Competition & Consumer Commission — in conjunction with the Australian Prudential Regulation Authority and the Australian Securities & ­Investments Commission.

Mr Frydenberg held talks with his state and territory counterparts over the weekend.

He said the decision to reduce foreign investment thresholds to zero dollars was intended to safeguard the economy and domestic businesses as they came under “intense pressure” from the COVID-19 pandemic.

“By temporarily reducing the foreign investment thresholds, the government will ensure appropriate oversight over all proposed foreign investment at this time,’’ he said.

“This is not an investment freeze.

“Australia is open for business and recognises that investment at this time can be beneficial, if (it is) in the national interest.”

The changes were supported by the Foreign Investment Review Board, which is led by former ASIO chief David Irvine.