Article:

COVID-19 finance update

21 April 2020

Marie Ryan, Associate Director and Accredited Finance Broker, Finance Solutions |

For SME businesses impacted by COVID-19, there is a low-cost loan option available through participating banks to assist with funding for working capital during this difficult period.

Under the scheme, approved lenders can provide eligible SMEs unsecured loans of up to $250,000 for up to 3-year terms, with no repayments for the first six months. These loans are to assist with working capital to get through the impacts of the COVID-19 pandemic.

The Government guarantees 50% of each loan which translates to lower risk for the bank and lower pricing.

The table below outlines the loan guide for SME businesses impacted by COVID-19.

Australian Government COVID-19 SME Guarantee Scheme

Description

Participating banks are offering eligible SME businesses an unsecured loan of up to $250,000,
backed by a guarantee of 50% of the loan amount by the Australian Government

Purpose

Working capital – to pay wages, creditors, rent, rates, existing loan repayments, fuel, stock, etc

X

Refinance or increase existing loan
Purchase equipment/property

Are you eligible?

Can be in any industry or service sector

Includes self-employed individuals and not-for-profits

 

Are you a business with an ABN and GST-registered or incorporated non-profit organisation?

Have you suffered a loss of income as a result of COVID-19? 

Is your annual turnover less than $50m?

Is your business based, registered and operating in Australia?

Would your business be viable and able to service the loan under normal business conditions?

Do you intend to continue to operate your business after receiving the loan?

Your business will also need to meet the individual lending criteria of the bank, which could include extra eligibility requirements – check your bank’s website for additional requirements

Loan amount

Minimum:  No minimum                  Maximum: $250,000
You may only access this loan through one lender, but can apply for multiple loans totalling up to $250,000

Term

3 years maximum

Interest rate

The bank will determine interest rate, taking into account the risk share held by the Government
Indicative rates available of 4.50-5.00%pa variable

Fees

The bank will determine fees - no fees are permitted to be applied to undrawn facilities
Indicative fees from current banks is nil establishment and nil account keeping fees

Monthly repayments

First 6 months   -
Remaining term -

Nil - capitalised to the loan
P&I - to repay over remaining term

Security

50% Government backed

Unsecured
Personal Guarantees of Directors or Business Owners may be required by the bank

Application
you can apply even if you’re not an existing client

Some banks are taking applications now.

Next steps

  • Check eligibility and apply online to a participating bank
  • The bank will contact you to discuss and request supporting documentation
  • The bank will complete an assessment - final credit decision rests with the bank

Availability

Available now and loan must be approved by 30 September 2020

Questions?

Ask your bank

Participating banks will be able to answer any questions relating to the loans
All participating banks will be published by the Australian Government on their website

As at 20/4/2020, the following lenders are also listed as participating but have no details on their websites yet: Australian Mutual Bank, Bank Australia, Bank of Us, Bendigo Bank, Get Capital, Judo Bank, Moula Money, On Deck Capital, Prospa, Qld Country Bank, Regional Australia Bank, Summerland Credit Union, The Capricornian Ltd and Unity Bank.
 

Lender Hardship Support Contacts

It is a difficult time for us all and many people are concerned about the impact of COVID-19 on their ability to repay debt. 

Don’t put off contacting your bank

All lenders have hardship teams ready to help.

Click on the relevant lender’s link in the table below to learn how they can assist. Lenders are reporting lengthy delays on the phone and recommend you apply online.

We’re here to help

If you need assistance, please contact BDO’s Finance Solutions Team, we’re here to help.