A greater number of small and medium size business will get access to a revised Coronavirus SME Guarantee Scheme announced by the Federal Government today.
Previous loan limits will be raised from $250,000 to $1 million when the second phase of the scheme begins on 1 October 2020.
Treasurer Josh Frydenberg and Minister for Employment, Skills, Small and Family Business, Senator Senator, Michaelia Cash, detailed the revised scheme in a joint statement.
The loans issued by eligible lenders will also have terms raised from three to five years and offer repayment holidays at the lender’s discretion.
Key changes to the Scheme include:
Extending the purpose of loans able to be provided beyond working capital, so 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 Ministers said that under the existing Scheme, the Government is providing an unprecedented level of support to SMEs in partnership with 44 approved lenders by guaranteeing 50 per cent of new unsecured loans to SMEs.
More than 15,600 businesses have accepted loans worth $1.5 billion to date.
"The next phase of the Coronavirus SME Guarantee Scheme will help businesses move out of
Hibernation, successfully adapt to the new COVID-safe economy and invest for the future," the statement said.
"The extended terms of the Scheme will enable lenders to continue supporting Australian small
businesses when they need it most.
"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.