On 11 March 2021, the Treasurer announced an expansion of the SME Loan Recovery Scheme. The scheme is designed to assist businesses recovering from the impact of the pandemic by making access to credit via third party vendors more accessible.
The expanded scheme is specifically targeted at businesses that have recently accessed JobKeeper assistance in the March quarter.
To be eligible your business needs to:
- Have received JobKeeper payments between 4 January 2021 and 28 March 2021, and
- Have turnover of under $250 million (up from $50Million).
Note that the SME Recovery Loan Scheme must be used for purposes approved under the scheme.
Key features of the expanded scheme include:
- The Federal Government will guarantee 80 per cent of the loan (up from the existing 50 per cent)
- The size of eligible loans will increase from $1 million to $5 million. This limit is in addition to the loans approved under phase 1 and phase 2 of the SME Guarantee Scheme
- The loan terms will increase from 5 years to 10 years
- Loans can be secured or unsecured (excluding residential property)
- Lenders will be allowed to offer borrowers a repayment holiday of up to 24 months, and
- Borrowers may refinance existing loans into the scheme (including those under Phase 1 and Phase 2 of the existing SME Guarantee Scheme).
While the interest rate will be determined by lenders, it will be capped at approximately 7.5 per cent.
Loans will be available from 1 April 2021 and must be approved prior to 31 December 2021.
Your Next Steps:
- Assess your current and future financing needs
- Assess your eligibility for the scheme
- Review existing loan arrangements – could there be benefits in refinancing current debt to slow down the rate of repayment?
If you require assistance or would like more information on the SME Recovery Loan Schemes, please get in contact with your William Buck Risk Advisor.