In the next few weeks banks will start to call asking for payments to be resumed. What is the best approach?
After six months off, at the end of September, thousands of individuals and small business owners across Australia will resume paying back loans that were put on hold due to the economic downturn sparked by COVID-19.
A number of courses of action are open:
- Resume full payments
- Pay interest only
- Extend the loan, paying interest and some principal
While interest only loans are not often recommended, in the scenario right now, you should assess your business position. These are unprecedented times. You could request to pay interest only now, then move onto full repayments at a later date.
The most prudent course of action is probably to extend the loan and pay off interest and some principal.
Looking to the future, most businesses will be hoping that by the middle of next year business life will have returned to close to normal – or perhaps a new normal but of course much remains uncertain.
Call in at your local TaxAssist Accountants if you need help or advice with your business and planning for the future.
Written by Terry Murphy
Date published 18 Sep 2020 | Last updated 31 Jan 2025
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
