If you’re a small or medium-sized business owner in need of an affordable loan then we’ve got good news: the federal government is expanding the Coronavirus SME Guarantee Scheme to allow businesses to borrow more and for a wider range of purposes.
The scheme, which is in phase one until September 30, allows lenders to provide eligible SMEs unsecured loans of up to $250,000 for up to three-year terms.
It’s had good traction too, with more than 15,600 businesses accepting loans worth $1.5 billion to date.
As such, phase two has just been announced to further assist Australia’s economic recovery from coronavirus.
Hold up. What’s this scheme all about?
The Coronavirus SME Guarantee Scheme basically involves the government guaranteeing 50% of each new loan issued to SMEs by eligible lenders.
This allows lenders to offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association (ABA).
In a nutshell: SME Guarantee loans will soon be larger, longer-term and for a wider range of purposes.
The second phase of the scheme will kick off on 1 October 2020 and will be available until 30 June 2021. Here are the key changes taking place:
– Loans can be for a wider range of investment, beyond working capital
– Secured lending now permitted (excludes commercial or residential property)
– Maximum loan size increased to $1 million (up from $250,000 per borrower)
– Maximum loan term now five years (up from three years)
– Lenders can now offer a repayment deferral period.
How do I apply?
This is where it can get a little confusing: the federal government has approved 44 lenders to participate in the scheme, which is a lot to choose from.
Fortunately, we can sit down with you and look at your business’s financing needs to help make your decision easier.
So if you’d like to discuss your eligibility and any other details of the scheme, get in touch today – we’re here to help you work through it.
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