While the economic recovery appears to be coming faster than expected, this may not be felt equally across all customers.
For some, the challenges brought on by COVID-19 remain very real.
In particular, although business confidence is returning, we understand many small business owners in certain sectors continue to experience strong financial headwinds. The end of government support, such as JobKeeper, and loan repayment deferrals may make it more challenging to stay afloat.
As Westpac’s customer advocate, what is most concerning to me about this cohort of small business owners is that many are reluctant to approach their bank for help.
The reasons for this vary.
But overwhelmingly, I sense they think it will make their problem worse, that they will get a black mark against them and be put into the “bad bank” from which there’s no escape.
But having led the customer advocate team here for almost five years, my view is that Westpac is here to do what it reasonably can to support customers through this challenging time.
As Helen Davis, general manager of the Small Business Bushfire Financial Counselling Support Line, which provides support to small businesses in need, says: “Generally, the earlier people reach out for assistance, the more options they will have. They can talk to their bank about what hardship arrangements are available, or people can discuss their options with a financial counsellor.”
“Financial Counsellors provide a free, independent and confidential service. We can help people to understand their business and personal debts, implications of personal guarantees, what grants or other support might be available, how to access dispute resolution services and provide emotional support.
“Financial Counsellors are great listeners.”
At Westpac, we have set up a new specialist team – the Business Assist team – dedicated to working through solutions which may be available for those business owners in financial difficulty.
In the 12 months to March 2021, small business customers in our hardship support and COVID relief programs jumped 391 per cent compared to the prior year. However, more broadly, many small businesses across the economy are getting back on their feet, our loan repayment deferrals to small business falling to $400 million at the end of January, out of the $9.5 billion provided since March 2020.
One recent example I heard was the owner of a popular regional cafe who, when COVID restrictions forced her to close from March to July last year, fell behind on her shop's rent. The mother of two had tried to negotiate a repayment agreement with her landlord but, instead, the landlord had claimed on a bank guarantee, which meant the cafe owner was indebted to the bank for an amount she could no longer afford.
The Business Assist team worked with the café owner to develop an acceptable payment solution. As a result, collections activity ceased and the cafe owner’s business has recovered.
Another is the owner of a well-established small retailer in Melbourne.
After successfully trading for more than 35 years, Victoria's lockdown saw his revenue practically disappear, forcing him to apply for JobKeeper to meet family and home loan expenses. Business loan repayments were deferred for six months, and after a session with the Business Assist team facilities were restructured, enabling him to avoid selling his family home.
Last month, we held a workshop with small business financial counsellors from around the country who provide free and independent advice to small business owners. These sorts of discussions help us much better appreciate just how draining emotionally it can be to own a small business when headwinds hit unexpectedly, impacting not just the business but often every aspect of the owner’s life.
As the story above highlights, if debts can’t be met, not only is the business at risk, but often also the owner’s family home due to personal guarantees, creating severe stress for all.
With this in mind, our Business Assist team aims to give you one point of contact (to really understand the complexities of your situation and avoid shuffling you around the bank’s various departments). They cut out unnecessary jargon and have an extensive “toolkit” they can tap into as they endeavour to find a solution acceptable to you and the bank which will help get your business back on track.
But of course, we know that for a number of small businesses, unfortunately, there may not be a way forward.
In these circumstances, our team provides the support to find the most respectful exit so small business owners can move into the next stage of their life.
And, if customers feel let down, they can always contact our complaints team.
Most importantly, if you are facing difficulties, I suggest talking to the bank at the earliest opportunity.
Small businesses can seek the services of a (free and independent) financial counsellor and contact the small business helpline. Or call 1800 413 828.
Westpac is also offering free TAFE courses for small business owners.