How SMEs can juggle their financial commitments during COVID-19

For many SME owners with a mortgage there is the added stress of juggling how to keep their home and business afloat during COVID-19. There are various support packages, services and tools that SME owners can use in their professional and personal lives to prop up their financial commitments.

Company relief and support

SMEs usually draw capital from a range of sources, including director’s loans and commercial loans from a bank or financial institution. According to the Australian Banking Association, financial relief has been offered to 98 per cent of businesses with loans with an Australian bank, so contacting your lender regarding deferring SME business loan repayments for a short period could alleviate some financial pressure.

Reducing overhead costs and managing all incoming and outgoing payments is another way to protect your business during this pandemic. For any SMEs running into issues with external stakeholders, independent support organisations such as Australian Small Business and Family Enterprise Ombudsman (ASBFEO) can assist.

Maintaining positive relationships with suppliers, partners and customers is essential as everyone is feeling the impacts of COVID-19. Our business has been using a combination of technology and human support to provide critical information, support and advice to customers and stakeholders.

Home is where the work is

Building a business from home or engaging teams through remote working is common for many entrepreneurs, start-ups and SME owners, so the ability to meet their mortgage repayments can have both professional and personal impact. It is important to avoid the “set and forget” approach, because there are several strategies you can explore to help save money on your home loan which can then be funnelled elsewhere.

  • Renegotiate – If your home and business finances are feeling comfortable but you
    want to prepare for any future uncertainty, negotiating a better rate with your existing lender could result in significant savings. Uno offers this as a free service.
  • Refinance – Refinancing your loan with another lender which is charging a lower interest rate is another effective strategy. Lenders are also offering generous cashbacks of anywhere up to $4000, which can certainly make a switch worthwhile with home loans at a historic low.
  • Active Home Loan Management – Why not look for a broker who will proactively monitor your home loan, and alert you to potential savings so you know you’re never paying more than you have to on your home loan? uno’s loanScore™ tool does just this and it takes 2 mins to sign up for.
  • Tap into a redraw facility – If you fall into the camp that has made additional loan repayments prior to COVID-19 and your home loan offers a redraw facility, you can leverage this to meet mortgage payments and shift focus to more pressing financial needs.
  • Consider a mortgage payment holiday – Unforeseen financial hardship may mean hitting pause on your mortgage for three to six months. However, note that interest still accrues during this time and will need to be paid off after the mortgage ‘holiday’ period. Working closely with our panel of 30 lenders enables our broker team to help people navigate the process.

With the roof over your head taken care of, you can then explore financial savings in other areas of your home or office space such as energy and internet providers.

I’d encourage all SME owners to cast a critical eye over their finances and to take action to navigate the financial and mental pressures of leading a business through economic upheaval.

Anthony Justice, CEO uno Home Loans

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