Coronavirus (COVID-19) updates from the Australian Government

Supporting the Flow of Credit


To cushion the economic impact of the Coronavirus and help build a bridge to recovery the Government has injected a total of $259 billion into the Australian economy.

Support for immediate cash flow needs for SMEs

Under the Coronavirus SME Guarantee Scheme, the Government is providing a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Scheme will guarantee up to $40 billion of new lending. This will provide businesses with funding to meet cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. This will assist otherwise viable businesses across the economy who are facing significant challenges due to disrupted cash flow to meet existing obligations.

To enable continued support for businesses in recovery, and for those facing the ongoing impact of the pandemic, the Government will extend the Scheme to be available to loans written until 30 June 2021. As part of this extension, the Government will make targeted amendments to the Scheme’s parameters to increase flexibility for SMEs and ensure that the loans available will suit the evolving needs of businesses.

Continued access to affordable credit is vital to help SMEs both get through the ongoing impact of the Coronavirus and succeed as the economy recovers. The extended Scheme will continue to support lenders’ ability to provide credit and ensure that SMEs benefit through low interest rates.

The initial phase of the Scheme remains available for new loans made by participating lenders until 30 September 2020. The second phase of the Scheme will start on the 1 October 2020 and be available for loans made until 30 June 2021. 

The Government will work to finalise the details of the second phase in coming weeks. Expressions of interest will be sought from lenders who wish to participate in the second phase after details of the Scheme’s arrangements have been published.

The Government’s $250 million COVID-19 Creative Economy Support Package includes a $90 million Show Starter Loans Scheme. These loans will be delivered as part of the Coronavirus SME Guarantee Scheme, with the Government guaranteeing 100 per cent of loan amounts. This will support concessional loans to assist creative economy businesses to fund new productions and events, to be delivered through commercial lenders and supported by terms and conditions tailored to the arts and entertainment sector. Further information on the Show Starter Loans and the COVID-19 Creative Economy Support Package is available from the Office for the Arts.

Quick and efficient access to credit for small business

The Government is cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. This reform will help small businesses get access to credit quickly and efficiently.

Reserve Bank of Australia – Supporting the flow and reducing the cost of credit

The Reserve Bank of Australia (RBA) announced a package on 19 March 2020 that will put downward pressure on borrowing costs for households and businesses. This will help mitigate the adverse consequences of the Coronavirus on businesses and support their day-to-day trading operations. The RBA is supporting small businesses as a particular priority.

The RBA announced a term funding facility for the banking system. Banks will have access to at least $90 billion in funding at a fixed interest rate of 0.25 per cent. This will reinforce the benefits of a low cash rate by reducing funding costs for banks, which in turn will help reduce interest rates for borrowers. To encourage lending to businesses, the facility offers additional low-cost funding to banks if they expand their business lending, with particular incentives applying to new loans to SMEs.

In addition, the RBA announced a further easing in monetary policy by reducing the cash rate to 0.25 per cent. It is also extending and complementing the interest rate cut by taking active steps to target a 0.25 per cent yield on 3-year Australian Government Securities.

Support for non-ADI and smaller ADI lenders in the securitisation market

The Government is providing the Australian Office of Financial Management (AOFM) with $15 billion to invest in structured finance markets used by smaller lenders, including non-Authorised Deposit-Taking Institutions (non-ADIs) and smaller Authorised Deposit-Taking Institutions (ADIs). This support will be provided by making direct investments in term and warehouse securitisations used by these lenders.

Australian Prudential Regulation Authority - Ensuring banks are well placed to lend

The Australian Prudential Regulation Authority (APRA) has announced temporary changes to its expectations regarding bank capital ratios. The changes will support banks’ lending to customers, particularly if they wish to take advantage of the new facility being offered by the RBA.

Fact sheet

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See also