As we emerge from lockdown, you may find yourself considering business financing to bolster your cash-flow or purchase an asset. Well, the window is rapidly closing on one of the best business financing opportunities you’re likely to see for a while. Now is the time to act if you want to secure a good deal.
The SME Recovery Loan Scheme (previously called The SME Loan Guarantee Scheme) closes at the end of this month, on December 31st 2021. We’re big fans of this loan scheme here at Rees Group, especially since it was revamped in October to include thousands more Australian SMEs.
Now, all that you really need to be eligible is an ABN, an annual turnover of less than $250 million, and the ability to prove that your business was adversely economically affected by COVID-19 lockdowns, which – let’s face it – almost everybody was.
Here’s why it’s such a good business financing opportunity.
Overall, we think that the conditions on these loans are pretty good.
The maximum loan amount is $5 million, and the maximum tenor is 10 years. These loans can be secured or unsecured, and can be used to support a variety of different business expenditures.
Importantly, businesses can also use the loan to refinance existing debts, including those from the first two phases of the SME Loan Guarantee Scheme. The interest rate will be capped at 7.5%, with rights to optional 24 month repayment holidays built into the terms.
Finally, the government is now guaranteeing 80% of the loan amount, up from 50% in previous versions of the scheme. If you’re currently considering the need for business financing, it’d be a smart move to take advantage of this scheme before it closes.
To find out more about the nitty-gritty details, including eligibility, you can visit The Treasury website.
Yes, you need to act super fast. But you should still seek advice before jumping into financing.
While I feel it’s important to let our clients know that this window of opportunity is almost over, you shouldn’t jump into a business loan before making sure that you’re ready. Ask yourself some hard questions. What is this business financing for? Are you scaling up your equipment, or developing new digital services for an increasingly online consumer base?
What’s more, will you be able to pay this loan back? Answering this question will require taking a hard look at your expenditure and your cash flow forecasts. This process can quickly become overwhelming or confusing on your own, especially when you’ve only got a few weeks left to decide.
Consulting an expert for advice is a much smarter course of action. If you’re considering taking on new business financing, have a chat with one of our experienced financial advisors first. They’ll work with our preferred brokers at Compare Financial Services to help you decide whether taking advantage of the SME Loan Recovery Scheme is the right move for your business.
The information in this article is of a general nature. It does not take your specific needs or circumstances into consideration. You should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.