Earlier this year, the Australian Government launched the Coronavirus SME Guarantee Scheme, a loan scheme aimed at helping small to medium businesses with a Government-backed guarantee of 50 per cent of new unsecured loans up to three years, with an initial six month repayment holiday. Now Government is extending the loan scheme to “help businesses move out of hibernation”, with a few enhancements to the scheme. Find out what these are right here.
Small and medium business loans
The Coronavirus SME Guarantee Scheme provides small and medium sized businesses with access to working capital to help them get through the impact of the Coronavirus. Under the existing scheme and up to 30 September 2020, eligible lenders are offering SMEs the following terms:
- Available to SMEs, including sole traders and not-for-profits, with a turnover of up to $50 million.
- Maximum total size of loans of $250,000 per borrower.
- Loans will be for up to three years, with an initial six month repayment holiday.
- Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Enhancements to the scheme
So far the scheme has seen more than 15,600 businesses accept loans worth $1.5 billion, well short of the $40 billion loan capacity flagged by Government in April 2020. The slow uptake is likely a result of businesses being hesitant to take on extra debt ahead of a recession.
From 1 October 2020 until 30 June 2021, the maximum loan size will quadruple from $250,000 per borrower to $1 million per borrower, along with the following enhancements to the scheme:
- Loans can be used for a broader range of business purposes, including to support investment in a period of economic recovery.
- The maximum loan size will be increased to $1 million per borrower.
- Loans can be up to 5 years rather than 3 years and the six month repayment holiday will be at the discretion of the lender.
- A loan can be either unsecured or secured (excluding commercial or residential property).
While loans will continue to be subject to lenders’ credit assessment processes, and the decision on whether or not to extend credit will remain with the lender, Government is encouraging lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. This means that SMEs will only incur interest on the amount they draw down rather than the full loan amount, offering SMEs more flexibility and the ability to draw down funds as the need arises.
Access to the scheme
Businesses interested in the Coronavirus SME Guarantee Scheme should contact their Mortgage Express broker for more information. Mortgage Express brokers work with the following lenders who have been granted access to the scheme, and can assist with lending advice.
- Bank of Queensland
- Commonwealth Bank of Australia
- Heritage Bank Limited
- Liberty Financial
- Macquarie Bank
- National Australia Bank Limited
If you have questions or concerns about your current financial situation, or you’d like to find out more about refinancing your mortgage or a mortgage deferrment, get in touch with a Mortgage Express broker.
Simply complete this form and a broker in your area will be in touch to arrange a suitable meeting time.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.
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