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New Government Business Loan Support. Coronavirus SME Guarantee Scheme, What Is It?

If you are running a business in the COVID-19 epidemic and are worried about your cash flow, help may be at hand. The Australian Government has put their hand in their pocket to assist SME’s, by standing in as security for a business loan. What this should essentially do is free up working capital for businesses and allow them to, hopefully, ride out the Corona Virus storm.


Normally, when applying for a business loan, mainstream lenders want to see some form of “skin in the game” from the business in the shape of a deposit. Usually, the minimum that you are looking at is around the 50% mark, put up from the SME’s side. Under the SME guarantee Scheme, the Government is using the $40 Billion that they have allocated for this to put down the deposit required on your behalf. Essentially they are the guarantor. What it means for small to medium businesses is that savings or capital do not need to be used to access more funds. From the businesses’ point of view, it is an unsecured business loan. What that usually would mean is a non-conforming lender and a much higher interest rate. To read more on that, click here. As the Government is standing in on the loan, competitive business loan rates are available.


This is a really great initiative, in my opinion, but it is not money for free, and the main thing to remember is that the lender’s standard lending criteria for their products will apply when assessing your loan. However, as stated below…


“The Scheme will enhance lenders’ willingness and ability to provide credit, supporting many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus.”


Hopefully, their willingness will increase. As would typically be the case, there is a list of qualifying criteria. The best way of becoming familiar with the “in’s and outs” of what will work for your business is to have a chat with a professional in finance. Castle Mortgages are Finance Brokers based in Adelaide that specialise in business finance. Feel free to contact us if you would like to consider your options.


The rules around the SME Scheme are that you need to be turning over less than $50 million a year. The maximum loan size that you can apply for is $250000.00 per borrower, and the term is over a maximum term of three years. To assist in this difficult period, loans will have an initial six month repayment holiday, with interest being capitalized. For the borrowers, the loan needs to be unsecured, so no additional security to be added from the business. Loans need to be approved by the 30th of September. The funds borrowed need to be used for the businesses’ current or upcoming cashflow needs, for example, rent or staff expenses. Loans will be available to the self-employed, including sole traders. They will also be available to not-for-profit as long as they meet the under $50 million turnover requirement, along with all the rest.


A range of loans will also be made available, including overdrafts and term loans. Loans being approved will still be up to the individual lender and will fall under their product matrix and assessment criteria. Loans will be available from a list of lenders that have been approved by the Government. The list is as follows.


  • ANZ
  • Australian Mutual Bank Limited
  • Bank Australia
  • Bank of Queensland
  • Bank of us
  • Bendigo and Adelaide Bank Ltd
  • Commonwealth Bank of Australia
  • Get Capital
  • Goulburn Murray Credit Union
  • Heritage Bank Limited
  • Hume Bank Limited
  • Illawarra Credit Union
  • Judo Bank Pty Ltd
  • Laboratories Credit Union
  • Liberty Financial
  • Moula Money
  • MyState Bank Limited
  • National Australia Bank Limited
  • On Deck Capital
  • Prospa
  • Queensland Country Bank Limited
  • Regional Australia Bank Ltd
  • South West Credit Union
  • Summerland Credit Union
  • Suncorp
  • The Capricornian Ltd
  • Tyro Payments Limited
  • Unity Bank
  • Westpac

If this scheme is something that you or your business would be interested in applying for, a mortgage broker that specialises in commercial finance, Castle Mortgages, a brokerage firm in Adelaide, would be able to assist you. From navigating which lender would suit your circumstances to applying and doing all the paperwork. Castle Mortgages can assist you in all of these aspects. If you would like to discuss your specific scenario or apply for a business loan,get in touch.


Please note, this article is not intended in any way to be constituted as advice. Please note that everyone’s financial circumstances are different. You should have a chat with a professional with regard to yours.


Source: https://treasury.gov.au/coronavirus/sme-guarantee-scheme

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