The financial services watchdog has released a new reporting standard requiring regular submissions of financial data from institutions partaking in the Commonwealth’s Coronavirus Small and Medium Enterprise (SME) Guarantee Scheme, created to ease SME cashflow pressures resulting from Covid-19 shutdowns.
Under the $40 billion scheme, the Commonwealth will provide a guarantee of up to 50 per cent to SME lenders for new unsecured loans issued to small businesses (including sole traders and not-for-profits) as working capital.
“The scheme will enhance lenders’ willingness and ability to provide credit, supporting many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus,” Treasury said in a statement.
The new reporting standard, classified by the regulator as ARS 920.0 Australian Government SME Guarantee Scheme, provides the Government with key metrics from lenders, including number of loans approved, loans impaired, and guarantee claims made and paid.
Lenders approved under the scheme will be required to complete the ARS 920.0 each week using APRA’s soon-to-be-overhauled Direct to Apra (D2A) application; otherwise, lenders must submit data by a method (for instance, a web-based solution) notified by the regulator prior to submission.
The reporting standard came into effect on 16 April 2020; the first data collection is due on 1 May for information as of 17 April.
Due to the need to promptly provide ARS 920.0 data to the Government, APRA has omitted its usual consultation process for the new reporting standard.
Commonwealth’s economic bailout plan
The Commonwealth’s SME loan guarantee scheme forms a key part of the Government’s estimated $320 billion emergency economic response to the Covid-19 crisis, targeting support towards individuals and households, as well as businesses and credit flow in the Australian economy.
To date, the Federal Government has made offers to 29 banks and five non-bank lenders – Get Capital, Liberty Financial, Moula Money, On Deck Capital, and Prospa – to access $34 billion of lending capital for SMEs via the loan guarantee scheme.
Meanwhile, several other lenders are under assessment for the scheme’s remaining $6 billion.
Under the scheme, loans of up to $250,000 per SME borrower (plus interest) are guaranteed by the Government, where loan terms go up to three years with an initial six-month repayment holiday.
Eligible loans can be issued from 23 March 2020 by lenders and must be approved by 30 September in order to be covered by the guarantee.
The loan guarantee scheme is hoped to complement other emergency SME support initiatives undertaken by the Federal Government and Reserve Bank, including a $90 billion term funding facility offering three-year funding to banks with a priority for SME lending.
Other measures include a $15 billion cash injection for the Australian Office of Financial Management to invest in wholesale funding markets used by small authorised deposit-takers (ADIs) and non-ADI lenders, as well as an effort to “cut red tape” to ease SME credit access.
APRA’s data collection revamp on-hold
Since late-2019, APRA has been driving efforts to replace its D2A financial data reporting application – currently used by more than 4,500 reporting entities – with its new solution, APRA Connect, which is slated to go live in September 2020.
The regulator suspended this initiative in March due to economic fallout from Covid-19, instead advising financial institutions to devote resources to mitigating the crisis.