The federal government has extended the SME Recovery loan scheme until mid-2022, with the announcement coming as welcome news to the many Australian small businesses who have endured a rocky holiday period.
I posted late last year about how the SME loan scheme was a great opportunity for SMEs to secure affordable business financing, so we’re excited to see this window of opportunity stay open a little longer.
A lot of our clients have had success with the SME scheme over the last year. Here are the key features as of January 1st.
Some features of the loan scheme have changed in the new year. For instance, the government guarantee has dropped from 80% of the loan amount back to 50%, and flood-affected businesses from 2021 are no longer eligible to apply. Most other terms remain unchanged.
Here are all the key details about the SME loan recovery scheme in 2022:
- The scheme is open to SMEs with up to $250 million annual turnover who can demonstrate their business has been adversely affected by COVID-19.
- Self-employed businesses and not-for-profits are also eligible.
- The Government guarantee will be 50% of the loan amount
- Borrowers can access up to $5 million in total
- Loans are for terms of up to 10 years, with an optional repayment holiday period
- Loans can be either unsecured or secured (excluding residential property)
Some other key details include:
- Lenders are allowed to offer borrowers a repayment holiday of up to 24 months
- Loans can be used for a broad range of business purposes. This includes investment support or refinancing any pre‑existing debts, including debts from this scheme.
- The interest rate on loans will be determined by lenders but will be capped at around 7.5 per cent. There is some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.
Further information on this scheme can be found here, on the official National Treasury website.
Are you considering applying for the SME Recovery Loan Scheme?
Over the last year, many of our clients have already taken advantage of this opportunity, using the SME Recovery Loan Scheme to finance their business growth in innovative ways.
If you think your business may be eligible and you’re considering applying for one of these loans in 2022, you should get in touch with one of our finance experts first by emailing rees@reesgroup.com. They’ll help guide and support you through the entire process
From discussing your eligibility and building your application, to brainstorming the best way to make the most of this great business financing opportunity, to working with a broker to find the right lender. Our advisors will have you covered every step of the way.
Want to chat further? Give us a call today to find out more.
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.
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