SME Recovery Loan Scheme
Most small businesses will have access to cheaper credit and additional funding through the updated SME recovery loan scheme, following the announced changes from the Australian Government, on the 25th August 2021. SMEs who are dealing with the economic impacts of the coronavirus with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.
On 25 August 2021, the Government announced that due to the continued economic impacts of the coronavirus, the original plan to help Australian SMEs obtain government backed funding from local lenders would be re-introduced. One of the main changes under the new scheme is that the Government will guarantee 80% of the loan amount. Previously, they were guaranteeing just 50% of the loan amount.
The loan scheme is available to eligible businesses until 31 Dec 2021.
The original requirements have been removed: SMEs do not have to have received JobKeeper during the March quarter of 2021 or to have been a flood-affected business in order to be eligible under the Scheme.
The Scheme is enhancing lenders’ ability to provide cheaper credit and allow viable SMEs to access vital additional funding to get through the impact of Coronavirus, recover and invest for the future.
Who’s eligible?
SMEs who are dealing with the economic impacts of the coronavirus with a turnover of less than $250 million.
Self-employed individuals and/or non-profit businesses may apply
Businesses that have accessed SME Guarantee loans in phase one and phase two may also apply
Loan Amount
Access loans of up to $5 million over a term of up to 10 years.
Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
Types of Loan
Loans include:
Term loans
Overdrafts
Working capital and revolving facilities
Leases
Hire purchase agreements.
Loan Pricing
Loans start from as low as 2.8% if fully secured by owner occupied commercial property.
Loan pricing will be advised by the lender, but will be capped at 7.50% pa (allowing for movement if variable).
Eligible Loan Purposes
A broad range of business purposes (including to support investment)
Refinancing existing business loans, including those from the SME Guarantee Scheme.
Loans can be used to invest, buy commercial property or to acquire another business.
Security
Loans can be either unsecured or secured (excluding residential property).
Government guarantee will be 80% of the loan amount.
Lenders may take additional guarantees
Think you might be eligible?
If your business has been significantly affected by COVID-19 crisis this is a unique opportunity to invest in the future growth of your business as eligible loan purposes are focused on your business activities. The pandemic will pass and this might be just what you need to pull through. If you believe that you meet the criteria for the scheme, there are definitely benefits to confirm your eligibility and applying for support.
Seeking information and support from traditional lenders can require extensive time and effort. Each lender will have slightly different criteria and will provide varying information to you. It is important to seek independent advice to determine whether the scheme meets your funding needs and business structure.
Contact Darren Mah at Nine Advisory Finance at [email protected] or call +61 452 339 778 to discuss your options or learn more about the SME Recovery Loan Scheme.
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