On the 11th March, Prime Minister Scott Morrison announced a $1.2 billion stimulus package to support the domestic tourism sector with Australian travellers offered half-price flights to travel interstate.
As part of its targeted support announcement, the Morrison government also announced an extension to and expansion of, its SME Loan Guarantee Scheme.
Open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021, this expansion will see an extension to the length and size of loans available to businesses, increase the amount of eligible businesses, and increase the Government’s guarantee of each loan from 50% to 80%.
- loans must be approved between 1 April 2021 and 31 December 2021
- businesses can apply for 10 year loans of up to $5 million
- these loans come with an option of a 24 month repayment holiday
- an eligible loan under the Scheme can take any form of credit (including overdrafts, working capital and revolving facilities, leases or hire-purchase arrangements), with the exception of a credit, debit, charge card or business card facility
- loans may be used to refinance any pre-existing debt of an eligible borrower
This scheme is specifically designed for small and medium sized businesses with up to $250 million turnover. Both self-employed individuals and non-profit businesses are eligible. Businesses that have accessed loans in Phase 1 and Phase 2 can also apply for loans under the scheme.
Also, unlike the previous phases, loans issued under the Scheme can be used to refinance existing loans or for a broad range of business purposes (including to support investment), but cannot be used to:
- purchase of residential property;
- purchase of financial products;
- lending to an associated entity; or
- lease, rent, hire, hire-purchase existing assets that are more than half way into their effective life.
Treasurer Josh Frydenberg said “this SME Recovery Scheme is part of the next step in our plan to help small businesses stand on their own two feet as the economy recovers from COVID-19.”
“The expansion and extension of the loans will back businesses that back themselves and will help businesses who continue to do it tough build a bridge to the other side of the crisis and keep their staff employed.”
How can Walsh Accountants help you?
If you would like to discuss how the extension of the loan scheme may benefit your business and help recover from the COVID-19 downturn, we encourage you to contact your accountant or financial representative.
This information is general in nature and does not take into consideration your personal situation and circumstances. Before applying for any form of finance, we encourage you to seek professional advice.