SME loan scheme extended beyond September, conditions eased

Under the existing scheme, some 15,600 businesses have accepted loans worth $1.5 billion. However, given initial predictions that the scheme will deliver $40 billion to SMEs, the government has now decided to extend and expand the scheme to get more money into SME pockets.

The next phase of the Coronavirus SME Guarantee Scheme, according to Treasurer Josh Frydenberg, will help businesses move out of hibernation, successfully adapt to the new COVID-safe economy and invest for the future.

Key changes to the scheme include:

• Extending the purpose of loans able to be provided beyond working capital, such that a wider range of investment can be funded;
• Permitting secured lending (excluding commercial or residential property);
• Increasing the maximum loan size to $1 million (from $250,000) per borrower;
• Increasing the maximum loan term to five years (from three years); and
• Allowing lenders the discretion to offer a repayment holiday period.

“The extended terms of the scheme will enable lenders to continue supporting Australian small businesses when they need it most,” said Mr Frydenberg.

“The expanded scheme will shift from providing access to working capital to helping businesses stay afloat during the crisis to now also enabling them to access more affordable and longer term credit so that they can invest for their future.”

The initial phase of the scheme remains available for new loans issued by eligible lenders until 30 September 2020. The second phase of the scheme will start on 1 October 2020 and will be available until 30 June 2021.