SME Loan Guarantee Scheme extended to support small business recovery

By Katherine O'Chee · · 2 min read
Fact Checked
Advertiser disclosure
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...
  • placeholder
    About Great Southern Bank
    Business+ Unsecured Loan

    A simple way to fund your business’s big plans. Borrow up to $50,000 without using your assets as security. A fixed interest rate means your repayments don’t change over the life of the loan. Apply in minutes with the Business app. Enjoy a fast approval process. $495 establishment fee.

    Interest Rate
    Upfront Fee
    Funding speed
    Rates range from 11.95% p.a. to 22.95% p.a.
    $495
    Varies
    Go to site
    Details
  • placeholder
    About Bizcap
    Unsecured Business Loan

    Business Loans from $5,000 to $2,000,000 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
  • placeholder
    About Lumi
    Unsecured Business Loan

    A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.

    Interest Rate
    Upfront Fee
    Funding speed
    from 9%
    -
    Within same day
    Go to site
    Details
  • placeholder
    About Great Southern Bank
    Business+ Unsecured Overdraft

    Manage the cash flow in your business with ease. Access up to $50,000 without using your assets as security. Lending criteria apply. Access your available limit from your linked Business+ Account. Use your Debit Mastercard for added convenience. Interest is charged on your balance owing, not your limit. Easy online application. $495 establishment fee.

    Interest Rate
    Upfront Fee
    Funding speed
    Rates range from 14.95% p.a. to 25.95% p.a.
    $495
    Varies
    Go to site
    Details
  • placeholder
    About ScotPac
    Boost Business Loan - powered by Business Fuel

    Get secured or unsecured business funding for up to $250K. For loan terms of 6 months to 2 years. No application or account keeping fees to pay. Minimum loan amount is $10,000. Get approval in 24 hours. Loans over $100,000 require security. Minimum annual turnover of $120K.

    Interest Rate
    Upfront Fee
    Funding speed
    from 14.00% p.a.
    Details on application
    From 24 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.