Coronavirus (COVID-19) updates from the Australian Government

SME Recovery Loan Scheme

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The Government’s SME Recovery Loan Scheme is designed to support the economic recovery, and to provide continued assistance, to firms that received JobKeeper and also to firms that are eligible flood-affected businesses.

The Scheme is enhancing lenders’ ability to provide cheaper credit, allowing many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus, recover and invest for the future. The Government will work with lenders to ensure that eligible firms will have access to finance to maintain and grow their businesses.

The Scheme builds on the framework established in the two phases of the Coronavirus SME Guarantee Scheme, and is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021 and businesses that are located or operating in eligible Local Government Areas (LGAs) impacted by the floods in March 2021.

Loans are available from 1 April 2021 until 31 December 2021.

The Scheme is only open to SMEs with a turnover of up to $250 million that were recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021 or were affected by the floods in eligible LGAs in March 2021. Both self‑employed individuals and non-profit businesses are eligible. Businesses that have accessed loans in Phase 1 and Phase 2 can also apply for loans under the scheme.

Participating lenders are offering guaranteed loans on the following terms under the SME Recovery Loan Scheme:

  • 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.
  • Loans can be either unsecured or secured (excluding residential property).
  • 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.

Lenders can offer any product suitable to the borrower, with the exception of credit cards, charge cards, debit cards or business cards. Loans issued under the Scheme may take any other form of credit, provided the Scheme’s eligibility criteria are met.

Loans issued under the Scheme can be used to refinance existing loans or for a broad range of businesses purposes (including to support investment) but cannot be used to: 

  • purchase residential property;
  • purchase financial products;
  • lend to an associated entity; or
  • lease, rent, hire or hire purchase existing assets that are more than half way into their effective life.

Loans may be used to refinance any pre-existing debt of an eligible borrower, including those from the SME Guarantee Scheme. There will be some restrictions on refinancing loans, such as not allowing loans that are more than 30 days in arrears to be refinanced; or borrowers who have entered external administration, or are insolvent, to refinance debts. Lenders can vary or restructure loans as long as they continue to meet eligibility criteria (including the maximum loan term) and do not increase the loan limit after approval.

Lenders must disclose the effective interest rate (including whether variable or fixed) to the borrower at the loan agreement date. For variable rate loans, the lender must disclose the relevant margin and underlying base rate where applicable.

Loans can be used to purchase non-residential real property (such as commercial property) or for the acquisition of another business.

Lenders will be able to rely on a declaration from the borrower in regards to the purpose of the loan. 
 

Eligible SMEs with operations in areas impacted by the floods in March 2021 may apply for a loan under the SME Recovery Loan Scheme. The following is a list of eligible Local Government Areas (LGAs) impacted by the floods as declared per the Australian Disaster Recovery Payment as at 31 March 2021: 

Armidale
Ballina
Bathurst
Bega Valley
Bellingen
Blacktown
Blue Mountains
Brewarrina
Byron
Cabonne
Camden
Campbelltown
Canterbury Bankstown
Central Coast
Cessnock
Clarence Valley
Cobar
Coffs Harbour
Cumberland
Dungog
Eurobodalla
Fairfield
Gilgandra
Glen Innes Severn
Gunnedah
Gwydir
Hawkesbury
Hornsby
Inner West
Inverell
Kempsey
Ku-ring-gai
Kyogle
Lachlan
Lake Macquarie
Lismore
Lithgow
Liverpool
Liverpool Plains
Maitland
Mid-Coast
Moree Plains
Narrabri
Nambucca Valley
Newcastle
Northern Beaches
Parramatta
Penrith
Port Macquarie-Hastings
Port Stephens
Oberon
Orange
Queanbeyan-Palerang
Richmond Valley
Shoalhaven
Singleton
Sutherland
Tenterfield
The Hills
Tweed
Walcha
Walgett
Wingecarribee
Wollondilly
 

Loans backed by the Scheme will be available through participating commercial lenders. The decision on whether to extend credit, and management of the loan, will remain with the lender. 

Borrowers can access credit under the Scheme through any lenders approved to participate. 

For more information on how to apply, visit Information for SMEs.
 

The Government is currently considering applications from lenders interested in participating in the SME Recovery Loan Scheme.

The following lenders have been approved to participate in the SME Recovery Loan Scheme.

  • ANZ
  • Bank of Queensland
  • Commonwealth Bank of Australia
  • Fifo Capital Australia
  • Get Capital
  • Judo Bank
  • Liberty Finance
  • Moneytech Finance
  • National Australia Bank
  • Queensland Country Bank
  • Regional Australia Bank
  • Social Enterprise Finance Australia
  • South West Credit Union Co-operative
  • Suncorp-Metway
  • The Mutual Bank
  • TrailBlazer Finance
  • Unity Bank
  • Webster Dolilta Finance Ltd
  • Westpac