Banks are preparing to ramp up lending following the expansion of the Federal Governments SME Recovery Loan Scheme which were published on 17th September, 2021.
On 25th August, 2021 the government announced changes to the eligibility criteria for the program, relaxing requirements for SMEs to have either received JobKeeper during the March quarter or to have been affected by floods. SME Recovery Loan Scheme is now available to provide support to SMEs adversely economically affected by the Coronavirus Pandemic by providing an SME Declaration obtained by the Participating Lender.
The scheme is open to small and medium sized businesses with up to $250 million turnover, including self-employed and non-profits. The Key Features of the scheme are;
borrowers can access up to $5 million in total
the Government guarantee will be 80% of the loan amount
lenders are allowed to offer borrowers a repayment holiday of up to 24 months
loans can be used for a broad range of business purposes, including investment support
loans may be used to refinance any pre-existing debt of an eligible borrower, including those from the SME Guarantee Scheme
loans are for terms of up to 10 years, with an optional repayment holiday period
loans can be either unsecured or secured (excluding residential property)
the interest rate on loans will be determined by lenders, but will be capped at around 7.5 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time
Loans will be made available from 1 April 2021 until 31 December 2021
The expansion of the program means businesses looking to expand, rather than just those fighting to survive, could now take advantage of current low rates.
Further information about the scheme can be found here. SME Recovery Loan Scheme | Treasury.gov.au
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