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Coronavirus SME Guarantee Scheme

Coronavirus SME Guarantee Scheme

Much has been written, and rightly so, about some of the high profile Government initiatives such as JobKeeper, JobSeeker and of course the Business Boost Cash Payments. It has however seen another very worthy Government initiative go largely un-noticed – the Federal Government’s Coronavirus SME Guarantee (CSMEG) Scheme.

The CSMEG is designed to support small business via the Government providing a guarantee of 50 per cent to lenders for new unsecured loans to be used for working capital. It is designed to enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.

SMEs with a turnover of up to $50 million will be eligible to receive these loans.

The Government will provide eligible lenders with a guarantee for loans with the following terms:

  • Maximum total size of loans of $250,000 per borrower.
  • The loans will be up to 3 years, with an initial 6 month repayment holiday.
  • 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.

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions. The Government will also encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. This will mean that the SME will only incur interest on the amount they draw down.  If they do not draw down any funds from the facility, no interest will be charged, but they will retain the flexibility to draw down in the future should they need to.

Timing

The Scheme is open now and be available for new loans made by participating lenders until 30 September 2020.

How to apply

If you’re interested in the Coronavirus SME Guarantee Scheme you should approach your financial institution for more information, or contact a finance broker such as Accountplan’s Mick Doyle on 07 3883 8999.

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