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SME loan deferrals on the decline, APRA data reveals

Adrian Flores
Adrian Flores
07 January 2021 1 minute readShare

The proportion of small businesses exiting their deferral on repayment of their loans continues on a downward trend, according to recent data from the prudential regulator.

Exits from deferral continued to outweigh new entries for the fifth straight month in November 2020, with $32 billion in loans expiring or exiting deferral and $7 billion entering or being extended, APRA said.

Victoria remains the state with the highest proportion of loans subject to deferral amongst the states and territories, with 3.2 per cent of loans deferred compared with the rest of the country at 1.7 per cent.

As of November last year, a total of $60 billion worth of loans are still on temporary repayment deferrals, which accounts for around 2.3 per cent of total loans outstanding.

Housing loans make up the majority of total loans granted repayment deferrals, and for the first time in November also have a higher incidence of repayment deferral with 2.4 per cent of SME loans subject to repayment deferral, compared to 2.8 per cent of housing loans.

The data is sourced from the domestic loan portfolios of APRA-regulated authorised deposit-taking institutions (ADIs), excluding foreign branches.

Data in October 2020 from the Australian Banking Association revealed that repayments have resumed on at least 82,000 small and medium-business loans or 41 per cent of the total number of deferred loans.

“This is a good sign for the economy. It shows that more Australians are getting back on their feet and resuming their loan repayments,” said ABA chief executive Anna Bligh.

“Right now, it’s really important that people contact their bank to figure out the path ahead. The earlier you speak to your bank, the more options they have to help you find a way through."

SME loan deferrals on the decline, APRA data reveals
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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