SME businesses in need of working capital due to the coronavirus outbreak can now access unsecured loans “more cheaply and more freely” than ordinary business loans.
The initiative is part of the government’s $40 billion Coronavirus SME Loan Guarantee Scheme, which kicked off just before the Easter weekend.
Because the government will guarantee 50% of the new loans, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association.
The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Furthermore, no payments are required from the business on these loans for the first six months (however interest will capitalise during the repayment holiday).
Eligibility requirements
The government will provide eligible lenders with a guarantee for loans with the following terms:
– eligible SMEs, including sole traders, must have a turnover of less than $50 million
– maximum loans of $250,000 per borrower
– loans will be up to three years, with an initial six month repayment holiday
– unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
The decision on whether to extend credit, and management of the loan, will remain with the lender.
Want to apply?
Participating lenders are already accepting applications from SMEs. So if you’re looking to bridge a gap in your business’s cash flow, please give us a call.
We’re more than happy to discuss your eligibility and more features of the scheme.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
