Reorganized SME Stimulus Loan program to help struggling businesses stay afloat

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The federal government has changed its SME recovery loan program so that more businesses can access cheaper credit and additional financing.

The SME Recovery Loan Program has been reorganized to provide financial support to eligible small and medium-sized enterprises until December 31, 2021.

The program was created to support the economy and provide continued relief to businesses that were affected by closures or flooding earlier this year.

The previous eligibility conditions for accessing this financial support have been removed to better reflect the recent economic impacts of the coronavirus.

Plan rules will be changed to reflect updated eligibility criteria, and loans will be available from that point on, according to the federal government.

The program “improves” the ability of lenders to provide cheaper credit, allowing small and medium-sized businesses to access additional finance.

The government has said it will work with lenders to ensure qualifying businesses have access to financing to maintain and grow their businesses.

Financial support available for companies in difficulty

Participating lenders will offer the following guarantees as part of the updated plan, according to the federal government.

  • The government guarantee will be 80% of the loan amount.
  • Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
  • Loans can be used for a wide variety of business purposes, including supporting investment.
  • The loans can be used to refinance any pre-existing debt of an eligible borrower, including those under the SME Guarantee Scheme.
  • Borrowers can access up to $ 5 million in total, in addition to Phase 1 and 2 loan limits.
  • Loans are made for terms of up to 10 years, with an optional period of repayment leave.
  • Loans can be unsecured or guaranteed (excluding residential property).
  • The interest rate on loans will be determined by the lenders, but will be capped at around 7.5%, with some flexibility for interest rates on variable rate loans to rise if market interest rates increase. increase over time.

Westpac and NAB ‘welcomed’ new changes

Westpac and NAB have already jumped at the new announcement, saying they welcome the changes and will continue to support companies facing challenges due to lockdowns.

Andrew Irvine, NAB Group Executive Business & Private Bank, said SME Stimulus Loans are a “good option” for businesses that need additional capital, and that expanding eligibility criteria is a “step forward.” positive “.

“Many small businesses across Australia continue to be tough on the impact of extended closures and border closures,” Irvine said.

Peter King, CEO of Westpac, said SME stimulus loans help keep businesses running.

“We encourage all business clients who are concerned about their finances to give us a call so that we can determine what help may be available to them,” King said.

Participating lenders

The following lenders are currently participating in the Federal Small Business Loan Collection Program.

  • ANZ
  • Queensland Bank
  • Commonwealth of Australia Bank
  • Fifo Capital Australia
  • Obtain capital
  • Judo bank
  • Freedom Finance
  • Moneytech Finance
  • National Bank of Australia
  • Regional Bank of Australia
  • Social business finance Australia
  • Southwestern Credit Union Cooperative
  • Suncorp-Metway
  • Mutual Bank
  • Finance TrailBlazer
  • Unity Bank
  • Webster Dolilta Finance SA
  • Westpac

Image by 99.films on Unsplash


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