The SME Recovery Loan Scheme ends this week, having been a conduit for almost 100,000 loans worth more than A$10 billion.

The scheme fell well short of the government’s expectations when it was launched as a COVID stimulus measure in 2020. The then-Treasurer Josh Frydenberg earmarked up to $40 billion for the scheme.

While it may have fallen short, it did help many businesses that might have missed out otherwise access credit. The question now is what impact the ending of the scheme will have in a tighter credit market.

According to figures provided by Treasury, at 30 April 96,700 loans worth $12.9 billion had been made under the original SME Guarantee Scheme and the revised SME Recovery Loan Scheme.

In its second iteration, businesses with a turnover of up to $250 million were able to access loans of up to $5 million over a term of up to 10 years. Loans could be secured or unsecured and could be used for a wide range of business purposes.

Lenders were allowed to offer borrowers a repayment holiday of up to two years and loans could be used to refinance existing debt.

The government guaranteed 80 per cent of the loan amount. Loan rates were capped.

Twenty-two lenders participated in the scheme.

The chief executive of finance company Earlypay (which was a participant), Daniel Riley, told Accountants Daily that credit-impaired business borrowers would face a steep increase in credit costs or not be able to access funding at all, as a result of the ending of the scheme.

“There’s going to be a much tougher environment, just when we don’t need it,” Riley said.