New SME Loan Guarantee Scheme to offer bigger benefits to small businesses
With the end of JobKeeper approaching in just over two weeks, the federal government today announced it will be extending its loan guarantee scheme for small businesses, in an effort to boost economic recovery. The new scheme will see the government guaranteeing 80% of business loans issued by participating lenders to small to medium-sized enterprises (SMEs), instead of the current 50%. Under the scheme, SMEs could take out much larger loans of up to $5 million over a longer period of ten years. And instead of a six-month repayment holiday businesses can opt to pause their loan repayments for 24 months. Another important change is that the new version will cover refinancing, which means SMEs may be allowed to switch to a better interest rate available under the scheme as well as access other benefits like longer loan terms. “The SME Recovery Scheme is part of the next step in our plan to help small businesses stand on their own two feet as the economy recovers from COVID-19,” Treasurer Josh Frydenberg said.“The expansion and extension of the loans will back businesses that back themselves and will help businesses who continue to do it tough build a bridge to the other side of the crisis and keep their staff employed.” To be eligible, businesses must have been on JobKeeper between 4 January and 28 March. Applications open from 1 April 2021 and must be approved before 31 December 2021. The government expects that over 350,000 JobKeeper recipients will qualify for this new scheme. Australian Banking Association’s chief executive, Anna Bligh welcomed the extension, saying it will give Aussie businesses the funding and backing they need.“This is the right product for the times. It includes more flexibility, and will allow small businesses to re-stock, rebuild and recover,” she said.Council of Small Business Organisations Australia’s chief executive Peter Strong also voiced his support. “This sends a message to businesses that wish to perhaps expand their manufacturing base, or those businesses that are still going through a difficult time but know they have a viable, that they can go to their bank and openly discuss their situation,” he said. For more COVID-related resources, visit our guide where we cover the many financial support measures available to your household and small business. Or scroll down below to start comparing a few business loan options.
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