Unsecured Loans of up to $250K coming soon….
Across the economy, many otherwise viable small and medium sized businesses are facing significant challenges due to disrupted cash flow. At the same time, businesses retain fixed obligations including rent, utilities, and employee expenses. The Coronavirus SME Guarantee released by the Federal Government and Department of The Treasury, will provide support for these businesses.
Under the scheme, the Federal Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital.
SME’s with a turnover of up to $50 million will be eligible to receive these loans under the following terms :-
- maximum loan size of $250K per borrower
- loan term up to three years, with an initial six month repayment holiday
- unsecured finance, meaning borrowers will not have to provide an asset as security
- subject to credit assessment process with the expectation that lenders will look through the cycle to sensibly take into account the uncertaintity of the current economic crisis
- Government is encouraging lenders to offer products where interest is charged on draw-down amount only, not charged on the entire facilty approved
- the usual ‘Responsible Lending Guidelines’ have been relaxed for lenders providing credit to existing small business customers.
The Scheme will commence by early April 2020 and will be available with participating lenders until 30 September 2020.
The Federal Government is yet to finalize the list of participating lenders and is currently gathering Expressions of Interest from potential lenders. Once finalized, it will be released HERE.