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Date Posted: 13 May 2021
The Federal Government has launched phase three of the SME Recovery Loan Scheme, as part of its commitment to supporting up to $40 billion in lending to Small to Medium Enterprises (SMEs).
The scheme specifically targets businesses that received the JobKeeper payment for the March 2021 quarter and has been extended to include businesses impacted by the March 2021 floods in specified disaster zones in New South Wales and Queensland.
The scheme will provide access to 80% government-backed, low-cost bank loans of up to $5 million at attractive terms (potentially with capitalising interest/repayment holidays for up to 24 months) from participating lenders.
The major banks have released limited information about their offers, with rates depending on factors such as the available security, loan term and whether repayment holidays apply. At the time of publishing, the Big 4 banks had announced the following:
The complete list of participating lenders is yet to be announced.
| Timing | Available now until 31 December 2021 | |
|---|---|---|
| Applicant eligibility |
|
|
| Loan amount | Loan amounts have no minimum, but are capped at $5 million (in addition to phase one and phase two loan limits). | |
| Type of loan |
Loans include:
Cannot include:
|
|
| Loan pricing | Loan pricing will be advised by the lender, but will be capped at 7.50% pa (allowing for movement if variable). | |
| Eligible loan purposes | ✔ | Any business purpose |
| ✔ | Refinancing existing business loans | |
| ✔ | A broad range of businesses purposes (including to support investment) | |
| X | Purchase of residential property | |
| X | Purchase of financial products | |
| X | Lending to an associated entity | |
| X | Lease, rent, hire, hire-purchase existing assets more than halfway into their effective life | |
| Security |
|
|
| How to apply | Applicants can apply through participating lenders, although limited details have been released. Loans will be assessed under individual lender criteria. | |
| More information | treasury.gov.au/coronavirus/sme-recovery-loan-scheme | |
If you meet the criteria for the scheme, there could be value in confirming your eligibility and applying for support. With eligible loan purposes focused on activities directly linked to your SME, it could be a way to invest in the future growth of your business.
Every business is different, so it is important to seek advice to determine whether the scheme meets your funding needs and business structure. BDO’s Finance Solutions experts can assist, so contact your local adviser to discuss your options or learn more about the SME Recovery Loan Scheme.
Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.
BDO Corporate Finance Ltd ABN 54 010 185 725 Australian Credit Licence No. 245513 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.