Coronavirus SME Guarantee Scheme

Coronavirus SME Guarantee Scheme - supporting the flow of credit

Under the Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme the Federal Government will guarantee 50 per cent of new loans issued by eligible lenders to SME’s.

The Scheme will enhance lenders’ willingness and ability to provide credit for working capital and will be available for new loans made by participating lenders from now until 30 September 2020.

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

  • SMEs, including sole traders, with a turnover of up to $50 million.
  • Maximum total size of 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. However, the Government expects that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions when determining whether credit should be extended.

As part of the loan products available, the Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. This will mean that the SME would 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 funds should the need arise.

SMEs interested in the Coronavirus SME Guarantee Scheme should approach their financial institution for more information. A list participating lenders may be found HERE.