SME Guarantee Scheme
Last updated 15 May 2020
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.
The Government will provide eligible lenders with a guarantee for loans with 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.
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.
FAQ's
Under the Scheme, the Government will support unsecured loans of up to $250,000 to small and medium-sized businesses. The loans are intended to provide for businesses current and upcoming cash flow needs, including rent and staff expenses.
The loans will be available with a term of up to 3 years. A six month repayment holiday will be available on all loans.
The Scheme is available to all active Australian businesses with turnover of less than $50 million in the previous financial year or expected turnover of less than $50 million in the current financial year. Both self-employed individuals and non-profit businesses are eligible.
Access to the loans is ultimately a decision for participating lenders.
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.
Loans backed by the Scheme will be made available through participating bank and non-bank lenders. The Government is not directly participating in the lending process.
If your current financial institution is not participating, loans will be available via other lenders. Participating lenders are required to offer loans under the Scheme to new customers.
To access the full list of participating lenders, click here.
Interest rates will be determined commercially by lenders. Businesses are encouraged to investigate options before committing to a loan under the Scheme.
Borrows are fully responsible for repaying the loans made under the Scheme. If the borrower is unable to meet repayments, lenders will follow usual default processes.
Not-for-profits are eligible for the Scheme, provided they have turnover of less than $50 million and have an ABN. As is the case for other businesses, non-profit bodies will be eligible for loans of up to $250,000 via commercial lenders participating in the Scheme.
Non-profit bodies seeking to apply for the Scheme should contact their current financial institution or any other participating lender.
This information is current as of the latest updated date, however due to the evolving response to the crisis, we will update as changes occur.