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SME Guarantee Scheme, are you eligible?

Small Business Adviser
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Times are tough for small businesses. The Coronavirus SME Guarantee Scheme was announced to provide eligible small and medium-sized businesses with a crucial financial boost to help them get through the impact of the Coronavirus.


What is the SME Guarantee Scheme?

The Coronavirus SME Guarantee Scheme was first announced as part of the government’s stimulus package in March. Under their part of the scheme eligible lenders are currently offering guaranteed loans up to 30 September 2020 on the following terms:

  • Available to SMEs, including sole traders and not-for-profits, with a turnover of up to $50 million.
  • Maximum total size of loans of $250,000 per borrower.
  • Loans will be for 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

This scheme has now been extended beyond September.  From 1 October 2020, eligible lenders will be able to offer loans during the next phase on the same terms as the current Scheme with the following enhancements:

  • Loans can be used for a broader range of business purposes, including to support investment in a period of economic recovery.
  • The maximum loan size will be increased to $1 million per borrower.
  • Loans can be up to 5 years rather than 3 years and whether there will be a six month repayment holiday will be at the discretion of the lender.
  • A loan can be either unsecured or secured (excluding commercial or residential property).

How does it work?

Under the scheme, the government guarantees 50% of new loans issued by eligible lenders to small-to-medium businesses, including sole traders and non-profit organisations with a turnover of up to $50 million. As a result, contributing lenders can offer eligible businesses secured and unsecured loans of up to $1 million per borrower for an extended duration of up to five years starting on 1 October 2020.

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

Is my business eligible?

You may be eligible if your business falls into the SME category with an annual turnover of less than $50 million, however, the Treasury maintains that “the decision on whether to extend credit, and management of the loan, will remain with the lender”.

How to apply

If you’re interested in the Coronavirus SME Guarantee Scheme you should approach your financial institution for more information. The Government is working with banks and other lenders to ensure loans are available as soon as possible. You can find the full list of participating lenders here.

The SME Guarantee Scheme provides a much-welcome financial lifeline for Australia’s businesses. If you need any business finance advice or have questions about the SME Guarantee Scheme being right for your business please contact us.

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