SME businesses in need of working capital due to the coronavirus outbreak can now access unsecured loans “more cheaply and more freely” than ordinary business loans.
The initiative is part of the government’s $40 billion Coronavirus SME Loan Guarantee Scheme, which kicked off just before the Easter weekend.
Because the government will guarantee 50% of the new loans, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association.
The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Furthermore, no payments are required from the business on these loans for the first six months (however interest will capitalise during the repayment holiday).
The government will provide eligible lenders with a guarantee for loans with the following terms:
– eligible SMEs, including sole traders, must have a turnover of less than $50 million
– maximum loans of $250,000 per borrower
– loans will be 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.
The decision on whether to extend credit, and management of the loan, will remain with the lender.
Want to apply?
Participating lenders are already accepting applications from SMEs. So if you’re looking to bridge a gap in your business’s cash flow, please give us a call.
We’re more than happy to discuss your eligibility and more features of the scheme.
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