Changes to the Business Finance Guarantee Scheme: Abnormal Lending on Normal Terms

 

On Friday, 1 May 2020, the Government announced changes to the operation of the¬†Business Finance Guarantee Scheme (BFGS). As readers might recall, the BFGS was introduced as part of its initial economic approach to the COVID-19 response. The specific change announced was that it would no longer be a Government requirement that a bank which was making a loan of more than $50,000 under the scheme would have to take security against the debtor’s default by way of a General Security Agreement (security over all of the assets of a debtor in the event of a loan default) – although¬†a bank is still entitled to ask for security if it wishes to do so.

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