SME Loan Guarantee Scheme: How many businesses have been approved, and do you fit the bill for phase 2 and 3?

By Katherine O'Chee · · 2 min read
Fact Checked
Advertiser disclosure
Businesswoman applying for business loan

With phase two of the government’s SME Loan Guarantee Scheme in full swing and phase three just released, businesses across Australia now have plenty of opportunity to access cheaper funding to boost their cashflow. 

Under the first phase, the government guaranteed half of all unsecured three-year business loans of up to $250,000. But under phase two which is set to run until 30 June 2021, the loan terms have been extended to five years, and loan amounts increased to $1 million, with 39 lenders including the Commonwealth Bank and ANZ participating in the scheme. 

Phase three, known as the SME Recovery Loan Scheme, has also begun as of 1 April 2021, with the caps for loan amounts and loan terms once again raised to $5 million and 10 years. 

Treasurer Josh Frydenberg said more than 35,000 business loans - over $3 billion of the planned $44 billion - have so far been provided to small to medium-sized enterprises (SMEs) under the scheme.

And with over 350,000 businesses now left without JobKeeper payments to cover staff costs, even more may jump on board and apply for a government-backed loan.

What to expect from phase two and three

While phase one was focused on assisting small businesses with short-term survival amid the pandemic, phase two was designed to help SMEs shift gears to longer-term investment.

The Australian Financial Review (AFR) reported that another key difference with phase two is that the government capped the interest rate at just over 10% , following reports that some lenders were charging scheme borrowers rates as high as 18%. 

But while lower interest rates could benefit some industries, it may exclude others, said the Australian Finance Industry Association’s chief executive, Diane Tate. 

“For example, fit-outs for restaurants, cafes or event spaces, some equipment used in gyms, and some IT equipment frequently used in offices in our cities and regional centres, will likely be out of scope,” she told the AFR. 

However, “if you’re a manufacturing, mining, construction, transport or agriculture business who wants to use, say, a three- or five-year loan to purchase a motor vehicle or other high-quality assets, this is good news.” 

To be eligible for phase two, you must be a small to medium-sized business with a turnover of up to $50 million (this includes sole traders and not-for-profits). 

Now with phase three also in the mix, even lower rates capped at around 7.5% may be on the table for eligible businesses, thanks to the government’s decision to guarantee 80% (instead of 50%) of loans from participating lenders.

For instance, the Commonwealth Bank recently announced that their new rates will be up to 75 basis points better than its government-backed loans from last year. 

To be eligible though, you’ll need to either have been on JobKeeper between 4 January and 28 March 2021 with a turnover of less than $250 million, or have been affected by the recent NSW and Queensland floods. Your application must also be approved before 31 December 2021. You'll still be eligible even if you've accessed loans in phase one and two.

Ready to explore your business loan options?  Scroll down below for a snapshot, or jump over to our business loans comparison table for a more extensive list.

Compare business loans

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can search our database of 50 products
Last updated 23 November 2024Important disclosures

Refine the list of business loans

Let’s help find you a great business loan...
  • 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
  • About Prospa
    Prospa Plus Business Loan

    Prospa uses risk-based pricing to determine your interest rate. They look at factors including your industry, years in business, cash flow, creditworthiness and the overall financial health of your business.

    Interest Rate
    Upfront Fee
    Funding speed
    Interest rates vary based on risk.
    3.5%
    from 24 hours
    Go to site
    Details
  • About Bizcap
    Unsecured Business Loan

    Business Loans from $5,000 to $5,000,000 with high approval rates. Access to funds on loans up to $500,000 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
  • About Westpac
    Fixed Rate Unsecured Business Loan

    Interest Rate
    Upfront Fee
    Funding speed
    -
    On application
    Varies
    Find out more
    Details
  • About NAB
    Business Overdraft

    Interest Rate
    Upfront Fee
    Funding speed
    10.47% p.a. variable
    Negotiable
    Varies
    Find out more
    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.