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Important information for customers with business finance contracts of $1,000,000 or less

Are you a business customer who has entered into, renewed or varied a business finance contract of $1,000,000 or less since 12 November 2016? If so, the changes below may apply to your contract.

What is changing and what does it mean for you?

We have a strong commitment to supporting businesses and improving the way we do things. With this in mind, we’re strengthening protections under some business finance contracts, to make them more favourable for our small business customers. This has been done in consultation with the Australian Securities and Investments Commission and the Australian Small Business and Family Enterprise Ombudsman.

 

The changes will take effect from 10 November 2017 and apply to finance contracts entered into, renewed or varied since 12 November 2016. This notice describes the changes.

 

This notice is in 2 parts:

Part A: changes affecting all finance contracts including specialised finance contracts
Part B: changes affecting only specialised finance contracts
The meaning of terms printed like this is explained in the last tab below

Is there anything you need to do?

No – you’ll automatically receive the benefit of the changes described in this notice without the need for any update to your terms and conditions (so you won’t receive new terms).

 

We’re here to help

If you have any concerns or questions about your small business financing arrangements, please contact your Relationship Manager or call 132 142, Monday to Friday 8:00am – 8:00pm.

 

 

Changes affecting only specialised finance contracts

This Part explains how the changes in Part A affect particular kinds of facilities.

 

Invoice finance contracts

Financial indicator covenants We won’t require you to comply with financial indicator covenants in your finance contract. However, this doesn’t affect terms of your invoice finance contract which:
  • give us rights to classify debts, inventory or other property without notice (including to reclassify debts as disapproved debts)
  • allow us to impose limits on debtor concentration levels (and change them)
  • relate to our calculation of the amount we pay for any debt (including the acceleration or purchase percentages) or the amount available for drawing under any cash advance component of the invoice finance contract
  • require you to maintain any reserves or allow us to hold reserves
Unilateral variation clauses Our rights to vary your invoice finance contract are not affected by this notice. Please see your invoice finance contract for details of things we can change and the notice you’ll receive.
What can trigger default

If a right we have under your invoice finance contract can only be exercised following a default (such as a right to terminate the invoice finance contract immediately), we’ll only exercise that right if one or more of the following occurs:

  • any standard default (these are described in Part A under “What can trigger default”)
  • you don’t comply with an obligation to give us information or documents relating to debts (including any debt reconciliation, report or declaration)
  • you don’t comply with any obligation to deposit proceeds of debts to a nominated account or to ensure they are deposited to such an account or you don’t comply with any other obligation in respect of those accounts.

These obligations (other than the standard defaults) are more fully described in your invoice finance contract and you should refer to that agreement for details.

 

Finance contracts for property development

Financial indicator covenants We won’t require you to comply with financial indicator covenants in your finance contract. However, this doesn’t affect your obligations to pay cost overruns (however described) if we determine that the cost to complete the works is more than your remaining available loan funds.
What can trigger default

We’ll only require early repayment of facilities provided for an agreed term or take enforcement action against you if one or more of the following occurs:

  • any standard default (these are described in Part A under “What can trigger default”)
  • you don’t comply with an obligation to pay cost overruns
  • you don’t comply with obligations to tell us about key milestones for the project or to meet key milestones
  • you don’t comply with obligations relating to sale contracts, sales quotas or application of sale proceeds, for any part of the project
  • you don’t comply with obligations relating to changes to the project documents or contracts, including financial projections and budgets for the project
  • you don’t comply with obligations under the project documents or contracts or fail to tell us about a material breach of those documents
  • you don’t comply with any requirement to give us a satisfactory report by a structural engineer (however described)
  • you don’t give us information or declarations we require relating to payment of the builder’s employees or subcontractors.

These obligations (other than the standard defaults) are more fully described in your finance contract and you should refer to that agreement for details.

 

Finance contracts for an aged care service provider

What can trigger default

We’ll only require early repayment of facilities provided for an agreed term or take enforcement action against you if one or more of the following occurs:

  • any standard default (these are described in Part A under “What can trigger default”)
  • you don’t comply with an obligation to apply proceeds from any accommodation bond (however described) to reduce the amount outstanding under the facility
  • you don’t comply with any requirement to give us details of accommodation bonds.

These obligations (other than the standard defaults) are more fully described in your finance contract and you should refer to that agreement for details.

 

Trade finance contracts

Financial indicator covenants We won’t require you to comply with financial indicator covenants in your finance contract. However, if a facility under your trade finance contract may be drawn in a foreign currency, this doesn’t affect rights we can exercise if your total liabilities under the facilities exceed your facility limit as a result of currency fluctuations.
What can trigger default We’ll only require early repayment of a facility provided for an agreed term or take enforcement action against you if one or more of the following occurs:
  • any standard default (these are described in Part A under “What can trigger default”)
  • you cease to hold any guarantee we require from Efic (Australia’s export credit agency).
bailment contract an agreement under which we bail goods (such as motor vehicles) to you, to be sold by you to your customers
creditor enforcement event is any of the following:
  • a court judgment or order is enforced against you or a guarantor (or any of your or their assets)
  • a notice under tax legislation is issued in respect of you or a guarantor (or any of your or their assets) under which an authority can require amounts owed to you by another person to be paid to the authority
  • another financier calls for early repayment of money you or a guarantor owes them because of an event of default (however described) under your or the guarantor’s arrangements with the other financier
  • a person enforces a security interest over your or a guarantor’s assets
finance contract

is our agreement with you under:

  • a Westpac “Business Finance Agreement” (BFA)
  • a St.George, Bank of Melbourne or BankSA Facility Agreement (FA),

where total facilities are $1,000,000 or less (based on facility limits at the date of the agreement, renewal or variation). It does not include derivatives (such as currency and rate swaps), credit card facilities or asset finance facilities (other than bailment). This definition does not cover margin loans

insolvent a person is insolvent if:
  • they’re unable, or state they’re unable, to pay their debts when they fall due, they enter into any assignment, arrangement or composition with any creditors or are otherwise taken to have committed an act of bankruptcy
  • they’re in liquidation, in provisional liquidation, under administration or wound up or have had a controller (as defined in the Corporations Act 2001 (Cth)) appointed to their assets
  • they’re subject to any arrangement, assignment, moratorium or composition, protected from creditors under any statute, or dissolved (except to carry out a solvent reconstruction or amalgamation)
  • they’re taken to have failed to comply with a statutory demand
  • an authority has appointed an administrator or investigator to them or their assets
  • something having a substantially similar effect to any of the things described above happens to that person
invoice finance contract

is our agreement with you under:

  • a Westpac Invoice Finance Agreement (IFA) and the terms of the ‘pricing agreement’ (as defined in the IFA) which relate to the IFA
  • a St.George Invoice Discounting Agreement (IDA) and the terms of the ‘pricing letter’ (as defined in the IDA) which relate to the IDA
  • where a finance contract includes all of the terms of an invoice finance facility, invoice discounting facility or invoice discounting plus facility, the terms of the finance contract which govern the invoice finance, invoice discounting or invoice discounting plus facility,

in each case, where the total facilities  under the ‘pricing agreement’, ‘pricing letter’ or finance contract (as applicable) are $1,000,000 or less (based on facility limits at the date of the agreement, renewal or variation)

specialised finance contract is an invoice finance contract, a trade finance contract, any finance contract for property development and any finance contract with an aged care service provider
standard defaults each of the things described under the heading “what can trigger default” in Part A
trade finance contract

is any finance contract which includes:

  • a facility which may be drawn in a foreign currency, or
  • a requirement for the borrower to hold a guarantee from Efic (Australia’s export credit agency)