The Federal Government has announced an extension to the SME Recovery Loan Scheme for COVID-19 impacted businesses. Prior to the announcement, phase three of the scheme was due to expire on 31 December 2021. The extension will see the scheme extended until 30 June 2022 with a reduced government guarantee of 50%.
What is the SME Recovery Loan Scheme?
The scheme is designed to support Australia’s economic recovery through supporting SME’s dealing with the economic impacts of the coronavirus. By providing a government guarantee of 50%, the scheme promotes lenders to extend credit terms to SME’s to support business recovery.
The scheme is now open for small to medium size businesses with up to $250 million turnover, including self-employed and non-profits who can demonstrate their business has been adversely affected by COVID-19.
Key features of the loans
Participating lenders are offering loans on the following terms under the SME recovery loan scheme:
- The government will guarantee 50% of the loan amount
- Lenders are allowed to offer a repayment holiday of up to 24 months
- Borrowers can access up to $5mil in total under the scheme
- Loans can be either secured or unsecured with a maximum duration of 10 years.
Eligible loan purposes include:
- Any business purposes
- Refinancing existing business loans
- A broad range of businesses including to support investment
Eligible loans cannot be used for:
- Purchasing or secured by residential property
- Purchasing Financial Products
- Lending to an associated entity
- Lease, rent or hire-purchase of assets that are more than halfway through their effective life.
The interest rates on offer to eligible SME’s are decided upon by the lenders, where rates vary based on being secure or unsecured, credit history and the duration of the loan.
Do you think your business may be eligible?
If you think your business meets the eligibility criteria it may be beneficial to confirm your eligibility with a Mazars specialist. Our banking and finance experts can assist you in understanding the financial requirements of your business and provide support in achieving funding advantageous through the scheme. Contact your usual Mazars advisor or complete the form below for a confidential discussion with one of our banking finance specialists.
Author: Alex Harris
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