While it seems the current climate may result in tightened lending conditions, there is still good news for businesses.
The Coronavirus SME Guarantee Scheme is allowing many otherwise viable SMEs access to additional funding to survive the impact of COVID-19, recover and invest for the future.
The Australian government is guaranteeing 50% of new loans made by eligible lenders to SMEs, to a total amount of up to $40 billion. This is intended to improve banks' readiness and ability to provide credit, as well as lower interest rates.
What does it mean for me?
In the second phase of the scheme, which started on 1st October 2020, you're able to apply for both secured and unsecured loans of up to $1 million, for terms of up to five years with a possible initial six month repayment holiday (at the discretion of your lender).
SMEs will be able to access the scheme to use loans for more than just working capital (so that a wider range of investment can be funded) – and secured lending will be permitted (excluding commercial or residential property).
In phase two, the maximum loan term has also increased from a three-year limit, to five years.
You have until 30 June 2021 to take advantage of the scheme.
Am I eligible?
All active Australian businesses with turnover of less than $50 million in the previous financial year, or expected turnover of less than $50 million in the current financial year, are eligible to apply for loans under the Scheme.
Both self-employed individuals and non-profit businesses are eligible, providing they meet the turnover requirements.
How do I apply?
First, contact your broker. We can help you make sure you're eligible and prepare your application. The lender will then decide on whether to extend the credit. It's that easy.
Other support
If your business has been affected by COVID-19 but you don't want to take out a loan, the Government has also introduced a range of other measures to support businesses. You can find more information on other forms of government assistance available here, or speak with your broker to find out which initiatives may benefit you.
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Original post by Bank of Queensland