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What You Need To Know About The SME Loan Guarantee Scheme

What you need to know about the SME loan guarantee scheme

Now that the JobKeeper initiative has ended, many Australian business owners are asking themselves, ‘now what?’ Enter, the SME Loan Guarantee Scheme.

If you’ve been relying on JobKeeper payments throughout the COVID-19 pandemic and find yourself in this position, the good news is that help is still available, and we can help you find it!

The SME Loan Guarantee Scheme is the Australian government’s latest offering to business owners who are still feeling the effects of the COVID-19 pandemic on their business.

What is the SME Loan Guarantee Scheme?

The SME Loan Guarantee Scheme is an extension of an existing scheme that guaranteed 50% of a loan for small to medium enterprises. The updated scheme sees the government guaranteeing 80% of loans from eligible lenders, to the value of up to $5 million (previously $1 million).

Additionally, maximum loan terms have been increased from five to 10 years and lenders can offer borrowers a 24 month repayment holiday, (previously this was set at six months).

The interest rate on loans will be determined by lenders, but will be capped at around 7.5 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.

How could the loan scheme help your business?

This scheme is designed to be a lifeline for businesses to get back on their feet and use the extra funding to re-stock, rebuild and recover. For many businesses, it could be the difference between staying open and shutting shop.

The Government has outlined that loans can be used for a broad range of business purposes, including to support investment. Loans may also be used to refinance any pre-existing debt of an eligible borrower, including those from the previous SME Guarantee Scheme.

For you, securing this funding could mean being able to continue paying rent or repayments on your office or keeping your hard-working employees in their jobs.

Is my business eligible?

It is estimated that over 350,000 businesses who accessed JobKeeper will be eligible to access the scheme.

The scheme is open to SMEs:

  • with a turnover of up to $250 million (previously $50 million)
  • that received JobKeeper payments between 4 January 2021 and 28 March 2021 (or were affected by the floods in eligible LGAs in March 2021)

Self-employed individuals and non-profit businesses are eligible and businesses that have accessed loans in Phase 1 and Phase 2 can also apply for further loans.

If you’re feeling anxious about your business’s survival now that JobKeeper payments have ended, applying for a loan under the SME loan guarantee scheme could be a great option. If you’re unsure whether your business is eligible or need help accessing the SME Loan Guarantee Scheme our friendly team is ready to help. Get in touch today!

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