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Key Points

  • Businesses can now apply for up to $1 million to aid their recovery and growth
  • You can use a loan issued under the scheme for a wide range of business purposes, including business assets, business vehicles, working capital, or purchasing commercial property
  • Small and medium businesses, including sole traders and not-for-profits with up to $50 million, can apply for loans under the scheme
  • Phase 2 will remain open to eligible borrowers until 30 June 2021.


What is the Coronavirus SME Guarantee Scheme?

The Federal Government launched the Coronavirus SME Guarantee Scheme (Phase 1) in March 2020 to provide small and medium businesses access to additional funding to support them through the pandemic. 

Under the scheme, the government is providing a 50% guarantee on loans provided to SMEs (including sole traders and not-for-profits) by participating lenders. This means eligible small and medium businesses have easier access to funding to aid their recovery from the impacts of COVID-19 and to invest in the future.


How is Phase 2 different from Phase 1?


Phase 2 of the scheme which came into effect on the 1st October 2020, is designed to enhance and extend the support measures from Phase 1. This includes some key changes:

  • The maximum loan size is now $1 million per borrower
  • Secured loans are now available in addition to unsecured loans
  • The maximum loan term is now up to five years
  • You can now access the scheme to use loans for a broad range of business purposes, including to purchase business assets and support investment in future growth


What can I use a SME Government Guarantee loan for?


You can use a loan issued under the scheme for a wide range of business purposes, including: 

  • Supporting cash flow
  • Eligible business assets and vehicles
  • Buying owner-occupied commercial property
  • Working capital 
  • Plus a range of broader businesses purposes


Loans issued under the scheme can’t be used for:


  • Buying a residential property
  • Buying financial products
  • Lending to an associated business
  • Leasing, renting or hire-purchasing existing assets that are more than halfway into their effective life.


Who’s eligible for a SME Government Guarantee business loan?


Business customers can apply for loans under Phase 2 of the SME Guarantee Scheme. Eligible businesses must:

  • Have an annual turnover of less than $50 million and a valid ABN
  • Be a tax resident of Australia – based, registered and operating in Australia
  • Use the loan for business purposes only
  • Not have existing loans supported by Phase 2 of the government’s Coronavirus SME Guarantee Scheme totalling more than $1 million (including loans from other lenders).


Further enhancements to the SME Guarantee Scheme


Earlier this month a further version of SME Guarantee Scheme was announced that builds on the framework established in the first two phases of the Coronavirus SME Guarantee Scheme. It is specifically targeted at SMEs currently receiving JobKeeper.  The scheme is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021.


In Summary:


Participating lenders are offering guaranteed loans on the following terms:

  • The Government guarantee will be 80% of the loan amount.
  • Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
  • Loans can be used for a broad range of business purposes, including to support investment.
  • Loans may be used to refinance any pre-existing debt of an eligible borrower, including those from the SME Guarantee Scheme.
  • Borrowers can access up to $5 million in total, in addition to the Phase 1 and Phase 2 loan limits.
  • Loans are for terms of up to 10 years, with an optional repayment holiday period.


How do I apply for a loan under the SME Guarantee Scheme?


Please contact us. We can check your eligibility and assist in applying for a loan if you qualify.

Further details regarding this recently announced version of the SME Guarantee Scheme can be found here