The New SME Recovery Loan Scheme will Begin as of 1st April 2021 through to 31st December 2021.With the first federal government’s SME Loan Guarantee Scheme helping over 35,000 expanding the scheme aims to support more businesses affected by the pandemic and boost the economy.
The government will now accept a higher responsibility of the guarantee, moving from a 50/50 backing with banks to the Government providing the banks with guarantee 80% of the loan.
The banks will still assess the credit worthiness of applicants.
Understanding the Eligibility CriteriaA business is eligible for the SME Recovery Loan Scheme if it meets the following conditions:
If your business has previously accessed a loan under the SME Guarantee Schemes you are still eligible to apply for this new extended scheme.
What are The Loan Details?The loans are up to $5 million in total and can be either secured or unsecured, and for a repayment period of up to 10 years.
Lenders are also able to offer a repayment holiday period of up to 24 months.
The interest rate offered is determined by each lender and will generally be capped at 7.5%.
If eligible, your business can use the loan for a number of purposes including:
The process is as follows:
Why Apply for the Loan Scheme?Some sectors still remain under pressure. For those businesses, the new scheme will provide targeted support and will also help to close the funding gap, giving businesses more time to recover.
Participating banks are also offering loans, including overdrafts, at very low interest rates, to help bridge cash flow gaps.
The Australian Banking Association provides some detail on participating banks: The Australian Banking Association – The Business Relief Package
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