Josh Frydenberg’s latest version of the SME Recovery Loan Scheme takes effect on Friday, October 1, and the Treasurer will be hoping it’s ‘third time lucky’.
The government earmarked A$40 billion for the scheme when it was launched last year but so far only $6.2 billion of loans to 77,500 businesses have been approved under the scheme’s guarantee arrangement.
The Treasury website lists 18 lenders as participants headed by the four major banks. Only two more ASX listed banks feature (BOQ and Suncorp), while Liberty Financial is on the list.
A range of mutual banks and fintechs round out the list of lenders, many of whom seem unlikely (in the normal course of business) to have the credit appetite under the version 3 scheme's eligibility criteria.
Late in August, the Treasurer announced expanded eligibility criteria for the scheme, under which the government guarantees 80 per cent of the loan amount.
Under the revised scheme, the government has removed the requirements for SMEs to have received JobKeeper during the March quarter 2021 or to have been a flood-affected business.
Businesses with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years. Loans can be secured or unsecured and can be used for a wide range of business purposes.
Lenders are allowed to offer borrowers a repayment holiday of up to two years and loans may be used to refinance existing debt.
New loans will be available until December 31.
Judo Bank said it will use the scheme to support hard-hit pockets of the SME economy, including hospitality, retail, travel and tourism.
Westpac said it will offer a variable interest rate of 2.58 per cent to businesses that meet the eligibility criteria.