SME Recovery Loan Scheme extended

The government has announced its decision to extend the loan scheme for small businesses for a further 6 months.

In welcome news, the government has advised that it is extending the loan scheme for small businesses for a further 6 months and will now be available until 30 June 2022.

SME businesses with a turnover >$250M that have been “adversely economically affected by COVID‑19” will be able to access loans up to $5M over a term of up to 10 years.

Treasurer Frydenberg said:

“The extension of the scheme continues our unprecedented support for SMEs and will help even more businesses get access to the funding they need to adapt, innovate and bounce back from the impacts of the pandemic...“[The] extension of the scheme will complement our record investment incentives which allow for the full and immediate expensing of the cost of eligible assets. “The Morrison Government will continue to support small businesses as they seek to rebuild, adapt and create jobs as part of Australia’s economic recovery.”

To date, approximately 80,000 loans worth circa $7.3B have been written since the scheme commenced in March 2020.

Key features of the Scheme also 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)

As per the Advisor, the move was welcomed by industry:

Isaac Rankin, ANZ managing director stated:

“The extension of the government-guaranteed loan scheme will provide more businesses with access to much-needed finance that will give them the confidence to help them thrive and expand...In the last month alone, we have seen twice the number of applications for the loan scheme. One third of applications have come from small businesses in the retail trade, accommodation and cafe and restaurant sectors, all which have been significantly impacted by lockdowns in Victoria and New South Wales. Small and medium sized businesses are pivotal in Australia’s economic recovery. As one of the largest employers, SMEs need certainty and finance to help them invest, grow and create jobs.”

Commonwealth Bank of Australia's group executive business banking, Mike Vacy-Lyle said the bank was:

"very supportive of the extension of the scheme to allow more businesses to take advantage of this low cost funding as we head towards the New Year. As the nation reopens, it’s fantastic to see recovery across the sector with many small businesses taking advantage of pent up customer demand and investing for future growth. At the same time, we know some businesses have experienced uneven recovery and continue to need additional support to re-stock, re-hire and generally, get back to business. We’re firmly committed to supporting all small businesses. As Australia’s largest bank, we will continue to do what we can to ensure small businesses are supported and set up for success for the future. We encourage businesses to speak to us about how we can help meet their business needs."

National Australia Bank’s Andrew Irvine commented:

“With Christmas just around the corner, it’s great to see all parts of the economy getting behind small businesses. The Federal Government’s SME recovery loans are a good option for businesses who need additional capital, helping them stock up or scale up to make the most of bumper Christmas sales. I’ve visited dozens of small businesses in recent weeks, they are thrilled to have customers back on the shop floor. Knowing they can access cash gives small businesses the confidence they need to rebuild after a tumultuous two years due to lockdowns and border closures. Our customers want to act quickly and respond to opportunities in the market."

Westpac’s Chris de Bruin said:

“This scheme has been a real lifesaver for businesses hit hard by COVID lockdowns, so it’s great to see it extended. In recent weeks, we’ve seen a 160 per cent week-on-week increase in applications, with the average deal size doubling since September. Westpac is ready to continue backing customers as they accelerate out of the pandemic, investing and creating jobs to drive economic recovery"

If you think your business may benefit from accessing the scheme please get in touch with the team at CapStack for an obligation-free discussion,

We are available at any time for your commercial property finance needs. Contact us now to get started.