The government has announced a relaxing of responsible lending obligations as they pertain to business lending, in order to ensure small businesses can access credit quickly and efficiently in the coming months.
As it stands, responsible lending obligations don’t apply to lending predominantly for business purposes; however, in order for a loan to fall within this exclusion, a lender is required to undertake due diligence to confirm the money borrowed meets this test.
Now, the government is changing this through providing an exemption from responsible lending obligations for a period of six months, in relation to the credit lenders extend to their existing small business customers so long as:
The exemption will apply to new credit, credit limit increases and credit variations and restructures.
The government recognised the “environment for small business has changed and continues to evolve with the rapidly-evolving challenges posed by the coronavirus”.
The revision is intended to enable lenders to move quickly to support small businesses, at a time when prompt action has become more crucial than ever.
Credit providers regulated by APRA will remain subject to APRA’s prudential standards while the exemption applies, and providers who subscribe to an industry code will remain obliged to abide by that code.
The Morrison Government has promised it will continue to work with the banking industry and the financial regulators to support Australian jobs and businesses moving ahead.
