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.