Coronavirus SME Guarantee Scheme
What Does It Do?
Under the Scheme, the Government is guaranteeing 50% of new loans issued by eligible lenders to SMEs. The Scheme has enhanced lenders’ willingness and ability to provide credit, supporting many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus.
What Types of Loans Are Available?
The initial phase of the Scheme remains available for new loans made by participating lenders until 30 September 2020. The second phase of the Scheme will start on 1 October 2020 and will be available for loans made until 30 June 2021.
In the initial phase of the Scheme, eligible lenders can offer guaranteed loans up to 30 September 2020 on the following terms:
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 up for 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.
From 1 October 2020 to 30 June 2021, eligible lenders will be able to offer loans during the second phase on the same terms as the initial phase of the Scheme with the following enhancements:
Loans can be used for a broader range of business purposes, including to support investment.
The maximum size of the loans will be increased to $1 million per borrower.
Loans can be up to 5 years rather than 3 years and whether there will be a 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).
Who Is Eligible?
The Scheme is available to all active Australian businesses with turnover of less than $50 million in the previous financial year, or expected turnover of less than $50 million in the current financial year. Both self-employed individuals and non-profit businesses are eligible.
Access to the loans is ultimately a decision for participating lenders. Credit assessment processes will be undertaken, however lenders are expected to look through the cycle to sensibly take into account the uncertainty of the current economic conditions.