Coronavirus SME Guarantee Scheme Phase 2
The Australian Government coronavirus SME Guarantee scheme ends 30th June 2021. Businesses that want access to this government supported business finance need to act now. Phase 2 of the scheme is aimed at providing eligible business with access to low interest finance. Businesses do not need to have been negatively impacted by covid 19.
What is the SME guarantee scheme?
In March 2020, the Australian government developed the scheme to support lending to small and medium enterprises (SME). They did this by guaranteeing 50% of new business loans issued by participating lenders. The government’s aim was to encourage lenders to provide cheaper and easier credit for business to sustain themselves through the impact of coronavirus, recover and grow. Phase 1 has now closed. This phase involved unsecured loans up to $250,000 to help businesses manage the impact of coronavirus.
Phase 2 is an extension of the scheme. Phase 2 is aimed at recovery and growth post covid. The scheme is still aimed at supporting lender’s ability to provide low interest rate finance. Phase 2 commenced on 1st October 2020 and ends 30th June 2021.
Is your business eligible for the SME guarantee scheme?
- ABN holders including sole traders and not-for-profit organisations.
- Turnover less than $50 million per annum.
- Having accessed phase 1 lending does not make you ineligible.
- Maximum lending limit of $1 million per ABN holder.
What can this finance be used for?
Finance can be used for a wide range of business purposes including:
- Business vehicle finance – low doc car loans and no doc car loans.
- Truck finance and equipment finance.
- Business assets including office and factory equipment.
- Buying commercial owner-occupied property.
- Cash flow and working capital.
Why refinance your phase 1 loan?
Phase 1 loans of the scheme were unsecured working capital loan terms. These were aimed at assisting businesses with disrupted cash flow due to covid 19. These loans can now be refinanced as a secured loan at a cheaper rate. The number of lenders participating in the scheme has grown and there is a more competitive market. Refinancing your loan will save you money.
- New lender at a lower interest rate.
- Refinance from unsecured to a secured loan at a lower interest rate.
- Reset the loan term to a maximum of a 5-year term.
Loan terms for SME guarantee scheme phase 2
Phase 2 loan terms include the following:
- Up to 5 years
- Maximum $1 million in total credit
- Unsecured or secured loans
- Competitive interest rates from a large number of lenders
Interest rate for SME guarantee scheme
There is a range of lenders participating in the SME Guarantee Scheme. Lending criteria and interest rates and fees vary between lenders. The government is not dictating interest rates to lenders. They are simply guaranteeing 50% of the loan value so that lenders can give you a better deal. With over 40 different participating lenders there is a lot of fine print and loan comparisons to get your head around. That is where an experience finance broker can help.
Why use AAA Finance?
Extensive finance experience and a focus on customer service make AAA Finance your finance broker of choice. We know what lenders are participating in the scheme and who has the lowest interest rates and best loan terms available that will suit your business needs. AAA Finance have helped several business access funding through the SME guarantee scheme. AAA Finance will save you time, money and protect your credit rating. Do not wait any longer to access this government supported finance. The end of financial year is just around the corner!
About the author
Peter Watman has extensive finance and automotive experience having worked in both industries for over 30 years. Peter founded AAA Finance and Insurance in 2012. He leads an experienced team that provides quick and easy finance solutions along with exceptional customer service.