Extended: SME Recovery Loan Scheme

Great news for small and medium-sized businesses (SMEs) as some banks have revised their SME Recovery Loan Scheme to assist eligible small businesses that were impacted by COVID-19. This means that these SMEs can now access low-rate finance from as little as 2.98% for up to $5 million.

The scheme’s third phase was set to expire on December 31, 2021. However the Federal Government has announced an extension to 30 June 2022 but with a reduced government guarantee of 50%.

The extension will provide SMEs with much-needed cash flow, giving them a fighting chance of returning to full strength.

Key Features:

  • Business Loans

  • Up to $5,000,000

  • Minimum of 3 years to maximum of 10 years

  • $0 establishment fees and $0 monthly account keeping fees for new loans approved

  • Variable interest rates from 2.98% to 5.18% p.a.

  • Options to defer repayments for 6 – 12 months

Eligible Loan Purpose include:

  • Any business purpose

  • Existing business loan refinancing

  • A diverse range of businesses, including those to support investment

Loans cannot be used for the following purposes:

  • Buying or securing residential property

  • Buying Financial Products

  • Lending to an associated entity

  • Lease, rent or hire-purchase of assets that are more than halfway through their effective life.

Eligibility for Phase 3 borrowers:

  • Have an annual turnover of less than $250 million

  • Have a valid ABN

  • Be a tax resident of Australia – that is based, registered, and operating in Australia.

  • The recipient of a JobKeeper payment between 4 January 2021 and 28 March 2021.
    Note: a JobKeeper Scheme‑Backed Loan can only be approved under this eligibility prior to the Scheme Expansion date (1 October 2021);

  • affected by the floods in eligible Local Government Areas in March 2021; Note: a Flood affected loan can only be approved under this eligibility prior to 1 January 2022; or

  • Adversely economically affected by COVID‑19. Note: a Covid Scheme‑Backed Loan can be approved under this eligibility from the Scheme Expansion Date (1 October 2021).

Self employed individuals and non-profit organisations are both eligible if they can demonstrate their business has been adversely affected by COVID-19. Businesses that have accessed loans in Phases 1 and 2 are also allowed to apply for loans under the scheme.

Phase 1 and Phase 2 Loan Scheme Preview

The SME Recovery Loan Scheme expands on previous loan schemes introduced during COVID-19, with the goal of providing funding to SMEs. 

The Australian government works with lenders to improve their ability to provide lower-cost credit and to ensure that eligible businesses can access finance to sustain and grow their operations.

The existing scheme gives access to 80 percent government-backed, low-cost bank loans of up to $5 million at attractive terms (potentially with capitalizing interest/repayment holidays of up to 24 months) from participating lenders.

Lenders also determine the interest rates offered to eligible SME's, with rates varying depending on whether the loan is secured or unsecured, credit history, and loan duration.

The Treasury Website contains a complete list of approved participating lenders.

If you think your business is meeting the eligibility requirements, you should consult with Sandcastle Finance to confirm your eligibility. Our banking and finance experts can assist you and discuss your options when applying for the SME Recovery Loan Scheme.

Please contact us today for your complimentary consultation.

Sally Prowse