It's an indication of the confusion pervading corporate Australia at present that about half the small and medium-sized business owners who initially contacted the Commonwealth Bank about the federal government's coronavirus SME guarantee scheme wanted to know how they should go about collecting their $250,000 grant.
When it was explained to them that they're not actually entitled to free money – instead, it's a three-year unsecured loan of up to $250,000 at an ultra-low interest rate of 4.5 per cent – their enthusiasm wilted. "I'll think about it and get back to you", was a common response.
The confusion of small business owners is hardly surprising when you consider the largesse that Canberra is now showing to large businesses that are struggling as a result of the coronavirus.
Virgin Australia – which is about 90 per cent owned by foreign entities like Singapore Airlines, Nanshan, HNA Group, Etihad and Richard Branson's Virgin Group – has its hand out for a $1.4 billion loan from the federal government to ensure its survival beyond the coronavirus crisis.
Not to be outdone, Qantas has told the Morrison government it expects a $4.2 billion loan to "level the playing field" if its smaller loss-making rival is bailed out.
But the confusion over government handouts is nothing compared to the uncertainty that's been created by the decision to prohibit residential and commercial landlords from evicting tenants that are facing financial duress due to the coronavirus downturn for the next six months.
Businesses that were on the brink of collapse even before the coronavirus crisis hit have been granted a temporary stay of execution.
Bankers are already wincing when they consider the problems they're likely to uncover when they take a closer look at their commercial property books in six months' time.
In private, bankers concede that they're in a holding pattern for the next six months or so, and that company wind-ups will be postponed until the economy starts to recover.
They recognise that they'd be accused of rank hypocrisy if they were publicly pledging to support struggling companies, while at the same time sending in the corporate undertakers to troubled firms.
That means businesses that were on the brink of collapse even before the coronavirus crisis hit have been granted a temporary stay of execution. Struggling firms will likely avail themselves of all offers to defer interest and principal repayments on their loans.
But it's when the dust settles that things will get tricky. Bankers are worried about the problem loans they'll uncover in their commercial property books – particularly among firms that were already relatively highly geared before the coronavirus outbreak.
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