The federal government has expanded its SME Recovery Loan Scheme, removing requirements for businesses to have received JobKeeper this year or to have been affected by flooding.
The relaxation of eligibility requirements is in response to the ongoing effects of COVID‑19, Treasurer Josh Frydenberg said in a statement.
Under the new guidelines, the loan scheme will continue to provide access to loans of up to $5 million over a 10-year period to SMEs with a turnover of less than $250 million that are experiencing financial hardship due to the effects of the coronavirus.
The federal government will guarantee 80% of the loan amount, which participating lenders can offer as unsecured or secured loans.
The loan scheme also allows lenders to offer borrowers a repayment holiday of up to two years.
Businesses can use the loans to cover a range of business expenses, such as to support investment and refinance pre-existing debt, including debt from the SME Guarantee Scheme.
The announcement has been welcomed by both small business associations and the lenders participating in the scheme.
Mark McKenzie, chief executive of the Australasian Convenience and Petroleum Marketers Association (ACPMA), said the expanded loan scheme will provide “valuable relief” to hundreds of small and family fuel retail businesses.
McKenzie said service station businesses in NSW and Victoria have experienced a 55% fall in fuel sales as a result of the current lockdowns, while many businesses in regional areas have reported falls as high as 75%.
“This initiative will allow these businesses to restructure their finances and draw down the cash they need to survive the lockdown, without putting their family home on the line,” he said.
Wespac, one of the 18 lenders participating in the program, has also welcomed the expansion of the loan scheme.
Peter King, chief executive of Westpac, said in a statement that the updated scheme will help small businesses affected by COVID-19 access low-rate finance with the option of deferring payments for up to two years.
“We encourage any business customers worried about their finances to give us a call so we can work through what help may be available for them,” King said.
The revised loan scheme will be available through participating banks until December 31, 2021.