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Treasurer extends Loan Scheme for SMEs until June 2022

The Australian government has decided to extend the SME Recover Loan Scheme for another six months until June 30, 2022

Since the scheme’s inception in March 2020, about 80,000 loans totalling approximately $7.3 billion have been written. 

The move aims to support Australia’s small-business-led recovery from the COVID-19 pandemic. 

Under the proposed Scheme extension, loans will be available from January 1 2022, until June 30 2022, with a government guarantee of 50 per cent. Currently, loans are available under the existing SME Recovery Loan Scheme from April 1 2021, to December 31 2021, with a Government guarantee of 80 per cent.

According to Treasurer Josh Frydenberg, the expansion of the scheme would help SMEs acquire the funding they need to adapt, innovate, and recover from the pandemic’s effects.

“As with the existing scheme, SMEs who are dealing with the economic impacts of COVID-19 with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years,” Mr Frydenberg said.

“With our economy showing signs of a strong rebound as restrictions ease, the government will reduce its loan guarantee from 80 per cent to 50 per cent, helping drive a private sector-led recovery.

“Extension of the scheme will complement our record investment incentives which allow for the full and immediate expensing of the cost of eligible assets.”

About the SME Recovery Loan Scheme

The Government’sGovernment’s SME Recovery Loan Scheme (the scheme) intends to assist the economic recovery and continue to assist SMEs dealing with the economic consequences of the coronavirus crisis. 

On December 13, the government announced a proposal to change the Scheme Rules to expand the SME Recovery Loan Scheme (under different terms) to assist SMEs economically affected by the Coronavirus Pandemic.

The SME Recovery Loan Scheme builds on earlier loan schemes introduced during COVID-19.

Other key features of the SME Recovery Loan Scheme include:

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

A welcome move

Australian Small Business and Family Enterprise Ombudsman Bruce Billson welcomed the decision, saying that small and family businesses are well-positioned to lead the national economic recovery as pandemic-related trading restrictions ease.

“Small businesses are working hard to get their businesses back up and running after a very challenging couple of years,” Mr Billson said.

“The good news is that COVID-19 conditions are finally settling, and that is allowing small business owners to get on with what they do best – growing their business.

“The extension of the SME Recovery Loan Scheme will offer much-needed cash flow to small businesses, giving them a fighting chance at returning to full strength.

“We hear first-hand from small, and family businesses that access to finance allows them to invest and innovate.

“With the Australian government guaranteeing 50% of loans secured under the scheme, we hope this will increase lender appetite, particularly with a focus on growth and investment lending.

“We want to see lenders make loans more accessible to small and family businesses, especially for those with clear growth and innovation plans and for ambitious new-to-bank customers seeking finance.

“Finance is the oxygen of enterprise, and those with growth and investment ambitions need additional support.  

“It is support for small businesses such as the SME Recovery Loan Scheme, that is contributing to making Australia the best place to start, grow and transform a business.”

Under the extended scheme announced by the Treasurer today, SMEs impacted by the pandemic with a turnover of less than $250 million can access loans of up to $5 million over a term of up to 10 years.

Further information can be found on the Treasury website.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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