More small and medium-sized businesses struggling to stay afloat due to the economic impacts of COVID will have access to cheaper funding after the federal government expanded the eligibility criteria for the SME Recovery Loan Scheme.
The government is removing requirements for SMEs to have received JobKeeper during the March quarter of 2021, or to have been a flood-affected business, in order to be eligible for the SME Recovery Loan Scheme.
What's special about the SME Recovery Loan Scheme?
Ok, basically the federal government will guarantee 80% of each loan in the scheme, and because of this, lenders can offer the loans "more cheaply and more freely" compared to ordinary business loans.
The first iteration of the scheme kicked off back in March 2020 under a slightly different name - the SME Guarantee Scheme (and back then the government was only guaranteeing 50% of the loan).
Under today's version of the scheme, SMEs dealing with the economic impacts of COVID 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.
Other key features of the SME Recovery Loan Scheme include:
- 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 to support investment.
- Loans may be used to refinance the pre-existing debt of an eligible borrower, including debts from the SME Guarantee Scheme.
- Loans can be either unsecured or secured (excluding residential property).
Could this scheme help your business?
So far, 74,000 loans totalling around $6.2 billion have been written under the scheme - so it's already helped a lot of other businesses around the country.
NAB and Westpac, both participating lenders in the scheme, immediately welcomed the changes, with NAB stating "SME Recovery Loans are a good option for businesses who need additional capital at this time".
It's important to note, however, that the loans will only be available through participating lenders until 31 December 2021.
So if you're interested in finding out whether the SME Recovery Loan Scheme could help your business, get in touch today and we can help you apply through one of the participating lenders.
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