The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says the government’s extension to the Coronavirus SME Guarantee Scheme will allow small businesses to access the working capital and investment funds they need.
The second phase of the scheme comes into effect from 1 October 2020, has been expanded to offer loans up to $1 million for a maximum term of five years.
Under the scheme, the government, in partnership with 44 approved lenders, will guarantee 50% of new, unsecured loans to SMEs.
“We support this next phase of the Coronavirus SME Loan Guarantee Scheme, which aims to help businesses emerge from hibernation and adapt to COVID-safe protocols so they can continue to operate and ultimately grow,” Ms Carnell says.
“Crucially, the extended terms of the scheme provides small businesses more affordable credit over a longer period so they can invest in their future.”
Small businesses with a turnover of up to $50 million can apply for the loans between 1 October 2020 and 30 June 2021.
“These loans are unsecured and that means you don’t have to provide your home as security for the loan,” Ms Carnell says.
“The new loan will have a maximum term of 5 years – up from three.
“This time round, lenders have discretion to offer a loan repayment holiday and interest accrued over that period will be spread over the course of the loan.
“While this is a good option for viable small businesses that have the capacity to grow, it is always a good idea to seek advice from a trusted, accredited financial advisor before entering into a loan.”