In recent months, the Australian Government announced the SME Guarantee Scheme to help support small and medium-sized businesses through the COVID-19 pandemic. Under the scheme, the Government would guarantee 50% of new loans issued by eligible lenders, allowing small businesses access to vital funding through the impact of the pandemic.
In recent weeks, a second phase of the scheme has been announced with changes to some of the terms.
What are the current terms of the scheme?
Until 30 September 2020, eligible lenders are offering small and medium-sized businesses guaranteed loans on the following terms:
- Maximum loan size of $250,000 per borrower
- Loan terms of up to three years, with an initial six-month repayment holiday
- Unsecured finance, meaning borrowers will not have to provide an asset as security for the loan
- Available to SMEs, including sole traders and not-for-profits, with a turnover of up to $50 million
What are the changes?
Phase two of the scheme will commence on 1 October 2020. Eligible lenders will be able to offer loans on the same terms as the current scheme, but with the following key enhancements:
- Maximum loan size will be increased to $1 million per borrower
- Loan terms will be up to 5 years rather than 3 years. Whether there will be a six-month repayment holiday will be at the discretion of the lender
- A loan can either be unsecured or secured (excluding commercial or residential property)
The new scheme will be available until 30 June 2021.
Borrowers will still need to comply with the lenders’ credit assessment processes.
For further information, get in touch with one of our mortgage brokers today.