Banks will defer loan repayments for six months for all small businesses affected by the coronavirus outbreak, Australian Banking Association chief executive Anna Bligh said.

As the economy takes an immediate hit from the measures to slow the spread of the virus, Ms Bligh said on Friday the number of calls to banks from distressed small business customers had increased "rapidly and exponentially."

Australian Banking Association chief executive Anna Bligh said the loan deferrals could be worth up to $8 billion. Credit:Alex Ellinghausen

She said the package could deliver up to $8 billion for small business customers of Australian banks.

"There are many small businesses struggling with loan repayments, and this deferral will help them," Ms Bligh told journalists.

“While this is first and foremost a health crisis, this pandemic has begun to have serious impacts across the economy, with small businesses beginning to feel the devastating effects," she said.

The announcement comes after the Reserve Bank on Thursday slashed interest rates to 0.25 per cent, with CBA not cutting variable mortgage rates but giving small businesses a 1 percentage point rate cut.

More to come