SME Loan Guarantee Scheme extended to support small business recovery

Small business woman looking at her laptop surrounded by ferns

As many small businesses struggle to find their footing in a COVID-safe economy, the federal government has stepped in with another lifeline: an expansion of its SME Loan Guarantee Scheme.

Under the existing scheme, the government guarantees 50% of business loans issued by participating lenders to small to medium-sized enterprises (SMEs). This guarantee initially covered three-year unsecured loans of up to $250,000 and was set to end on 30 September 2020. 

But the latest move means SMEs can soon access much larger loans of up to $1 million via the scheme and repay them over a longer period of five years. 

This second phase will run from 1 October 2020 until 30 June 2021. In other words, it’s due to start a day after a number of government stimulus programs (including the cash flow boost and apprentice wage assistance) expires.

Phase two will also include secured loans (except if the collateral is commercial or residential property), and apply to a broader range of funding purposes beyond working capital.

Treasurer Josh Frydenberg said the expansion reflects a shift in the government’s focus from aiding businesses’ short-term survival to supporting their investment in the longer run as they emerge out of COVID-induced ‘hibernation’.

It comes after recent research found over a quarter of SMEs see lack of available funding as their biggest barrier to innovating and growing for the rest of 2020.

A total of 41 lenders are currently participating in the scheme, including the big four banks (ANZ, Commonwealth Bank, NAB, Westpac) as well as non-bank lenders such as GetCapital, OnDeck, Prospa and Spotcap. 

So far, uptake has been lower than expected, with 15,600 businesses getting their hands on loans worth $1.5 billion, compared to the planned $40 billion. 

But CommBank’s chief executive, Matt Comyn said the expanded scheme will play an important role in small business recovery in the months ahead.

“It is clear from the challenges that we are currently facing in Victoria that the recovery will not be as smooth or quick as first thought, which is why it is essential we come up with creative solutions that offer small businesses in particular different ways to play their part in helping the country and Australians get back on their feet,” he said. 

“[The] lifting of the amount available to $1 million and the loan extension to five years will allow SMEs … to make the investments needed to get people back to work, create new jobs and lift confidence across the economy.” 

NAB’s chief executive, Ross McEwan also welcomed the expansion. He said the changes will make the scheme “available to more businesses, for longer, to help them rebuild - and support Australia’s recovery.” 

Looking for extra finance to pay your staff or buy new equipment? Get started with a few deals below, or jump over to our business loans comparison table for even more options.

Compare business loans - rates updated daily

Search promoted business loans below or do a full Mozo database search. Advertiser disclosure.

Refine the list of business loans

Let’s help find you a great business loan...
  • Featured Product
    Line of Credit

    Zip Business Loans online application process can be completed in as little as five minutes, and once approved you can access the funds within 24 hours. A line of credit up to $500k that converts into a loan when you draw down. Participating lender in the SME government guarantee scheme.

    Interest Rate
    Upfront Fee
    Funding speed
    On Application
    2% to 3%
    Instantly, once approved
    Go to site
    Details
  • Business Loan

    Say goodbye to lengthy applications with online lender Moula. With a speedy 10 minute application process and potential funding within 24 hours, Moula can help you meet your businesses inventory or cash flow needs without the fuss. Participating lender in the SME government guarantee scheme.

    Interest Rate
    Upfront Fee
    Funding speed
    from 15.00% p.a.
    2.00%
    24 Hours
    Go to site
    Details
  • Unsecured Small Business Loan

    Fast, unsecured business loans approved within 24hrs. Access funds up to $300k for any business purpose with no application fees, minimal paperwork and funds in your account quickly so you can focus on growing your business.

    Interest Rate
    Upfront Fee
    Funding speed
    from 10.99% p.a.
    3% establishment fee
    24 hours
    Go to site
    Details
  • Unsecured Business Loan

    A straight forward business loan with no hidden fees or charges. Achieve business goals through having fast, easy access to finance to give your business the boost it needs.

    Interest Rate
    Upfront Fee
    Funding speed
    from 16%
    $0.00
    Within same day
    Go to site
    Details
  • Unsecured Business Loan

    Business Loans from $5,000 to $600,000 with high approval rates. Access to funds in as little as 3 hours. Cash flow friendly repayments and open minded offers.

    Interest Rate
    Upfront Fee
    Funding speed
    On Application
    3%, starting at $399
    from 3 hours
    Go to site
    Details

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.