SMALL & MEDIUM BUSINESS ENTERPRISES
The Coronavirus SME Guarantee Scheme will provide support for these businesses. Under the Scheme, the Government will provide a guarantee of 50 per cent to small and medium enterprise (SME) lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months SMEs with a turnover of up to $50 million will be eligible to receive these loans
Eligible lenders are currently offering guaranteed loans up to 30 September 2020 on the following terms:
* Maximum total size of loans of $250,000 per borrower.
* The loans will be up to 3 years, with an initial 6 month repayment holiday.
* The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
From 1 October 2020, eligible lenders will be able to offer loans during the next phase on the same terms as the current Scheme with the following enhancements:
* Loans can be used for a broader range of business purposes, including to support investment in a period of economic recovery.
* The maximum loan size will be increased to $1 million per borrower.
* Loans can be up to 5 years rather than 3 years and whether there will be a six month repayment holiday will be at the discretion of the lender.
* A loan can be either unsecured or secured (excluding commercial or residential property).
Loans will continue to be subject to lenders’ credit assessment processes, with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions. The decision on whether to extend credit, and management of the loan, will remain with the lender.
Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.
As part of the loan products available, the Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. This will mean that the SME will only incur interest on the amount they draw down. If they do not draw down any funds from the facility, no interest will be charged, but they will retain the flexibility to draw down in the future should they need to.
The initial phase of the Scheme remains available for new loans made by participating lenders until 30 September 2020. The second phase of the Scheme will start on 1 October 2020 and will be available for loans made until 30 June 2021.
How to apply
If you’re interested in the Coronavirus SME Guarantee Scheme you should approach your financial institution for more information. The Government is working with banks and other lenders to ensure loans are available as soon as possible.
Find out more about the Coronavirus SME Guarantee Scheme by following the below link. You will also find a list of current financial institutions taking part in the scheme.