The Australian Government’s SME Recovery Loan Scheme (the Scheme) is designed to provide access to affordable credit for eligible small and medium enterprises (SMEs) that have suffered from the impacts of the March 2021 floods or from COVID-19. From the 1st of October 2021 the eligibility criteria will be expanded to include more SMEs.
Want to know more about who is eligible and what is available?
Find out with your trusted Gold Coast Accountants at Crest Accountants.
Who is eligible?
Initially the Scheme was open to SMEs (including self-employed and non-profits) with a turnover of up to $250 million who received a JobKeeper payment between the 4th of January 2021 and the 28th of March 2021, or were affected by floods in eligible LGAs in March 2021.
From 1st of October 2021, the Scheme has been expanded to include SMEs that have been adversely economically affected by COVID-19. This replaces the previous criteria of having received a JobKeeper payment in the specified period. The alternative criteria for flood affected SMEs from eligible LGAs is still in place.
What terms are offered by participating lenders under the Scheme?
- The Australian Government will guarantee 80% of the loan
- Lenders may offer a repayment holiday of up to 24 months
- Borrowings up to $5 million, on top of Phase 1 and Phase 2 loan limits
- Loan terms of up to 10 years with an optional repayment holiday
- Loans can be utilised for a variety of business purposes and may be utilised to re-finance pre-existing debt
- Interest rates determined by lenders but initially capped at 7.5%. This rate may rise over time for variable loans if the market interest rate rises.
- Secured or unsecured loan options are available. Residential property is not permitted to be used for security. Any other security is permitted.
What products are on offer and what can the loan be used for?
Lenders can offer any product except for credit cards, charge cards, debit cards or business cards.
Loans can be used for a broad range of business purposes including but not limited to the following:
- Refinance existing debt (with some restrictions)
- Refinance debt from the SME Guarantee Scheme
- Investment support
- Purchase commercial property
On the contrary, loans cannot be used for the following:
- Purchase residential property
- Purchase financial products
- Lend to a related entity
- Lease, hire or purchase existing assets greater than half-way through their effective life
How to apply
Loans are available between 1st of April 2021 through to 31st of December 2021. The Government has approved plenty of reputable commercial lenders for participation. A list of approved lenders can be found on the Treasury web site.
Decisions to extend credit and management of the loan are held by the lender.
Talk to your trusted Gold Coast Business Accountant about accessing the loan and what it means for your business.
Need help understanding and accessing the SME Recovery Loan Scheme? Your trusted team of Gold Coast Business Accountants are here to help. Contact Crest today.
Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice.
