SME Loan Guarantee Scheme extended!
The Australian government has announced a proposed new stimulus package for the next stage of the Covid-19 National Economic Recovery Plan, valued at $1.2 billion. One part of that plan is to expand and extend the SME Loan Guarantee Scheme. To date, the Scheme has guaranteed more than 35,000 loans worth more than $3 billion, supporting thousands of small businesses through the pandemic.
The extension of the Scheme is targeted at supporting businesses that received JobKeeeper payments during the March 2021 quarter of which there are 350,000 eligible businesses. The eligibility period commences 1 April 2021 and ends on 31 December 2021.
The proposed loans can be used for a broad range of business purposes, including to refinance existing loans. Interest rates will be capped at approximately 7.5%. The Scheme covers secured and unsecured lending with lenders permitted to take guarantees and real property security, other than residential security.
So what’s changing?
Firstly, the guarantee has increased from the original 50/50 split between the Government and the lender to an 80/20 split providing greater comfort for lenders.
Secondly, loan limits have increased from $1 million to $5 million.
Thirdly, loan terms can be increased from 5 to 10 years.
Fourthly, lenders can offer ‘repayment holidays’ of up to 2 years.
