Government-backed business loans
Find out what government-backed loans are available for your business during the COVID-19 pandemic.
On 22 March 2020 the Australian government unveiled its second wave stimulus package aimed at helping Aussies survive the impact of COVID-19 on the economy. Out of this package has come a scheme that will see the government back 50% of new loans for small businesses from participating banks and lenders. This will provide much-needed working capital of up to $40 billion to businesses.
What is a government-backed business loan?
A government-backed business loan is a loan that the government provides a guarantee to the lender on. For COVID-19 government-backed business loans, this guarantee is 50% of the funding amount. Having a partial guarantee on the funds means that lenders are able to offer loans to customers at lower rates. It also means that lenders can be less stringent than they may normally be with their lending criteria. This therefore enables lenders to offer more loans to people in need who may not have otherwise qualified for funding.
Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme
The COVID-19 government-backed business loans, known as the Coronavirus SME Guarantee Scheme, are loans of up to $250,000 that are available to eligible Australian SMEs. These loans will all be unsecured with terms of up to three years and no repayments will be required for six months. On top of this, businesses will only be charged interest on the amount that they draw down. No interest will be charged on unused funds. The loans will also have no establishment or monthly fees attached.
Rates for loans under the scheme will differ depending on the lender and the circumstances of the borrowing business, but generally these loans will have lower rates than standard business loans.
When will the Coronavirus SME Guarantee Scheme loans be available?
Loans under the Coronavirus SME Guarantee Scheme will be available from early April until 30 September 2020. The exact date the loans launch will vary somewhat depending on the participating lender.
How do I qualify?
To qualify for a government-backed business loan your business must have an annual turnover of less than $50 million.
Which banks are offering government-backed business loans?
The following banks are offering government-backed loans, as well as other forms of financial assistance, to support small businesses affected by COVID-19:
|ANZ has confirmed that it will be participating with the scheme and applications are now open. New business loan customers can apply for loans under the scheme in the form of:|
Other ANZ COVID-19 support measures include:
Bank of Queensland
|The Bank of Queensland is offering up to $250,000 in unsecured overdrafts for new and existing business customers under the Coronavirus SME Guarantee Scheme.|
BOQ is also offering the following measures to support existing business loan customers:
|Bankwest is also providing lower rate government backed loans that comply with the terms of the scheme that are now available to new business customers affected by COVID-19.|
Other support measures to business customers affected by COVID-19 from Bankwest include:
Bendigo and Adelaide Bank
|Bendigo and Adelaide Bank's new business loans under the SME Guarantee Scheme are effective as of 3 April 2020.|
In addition to providing these loans, other coronavirus relief measures for businesses include:
|CommBank announced that it is making up to $10 billion in funds available for extra small business loans in line with the scheme. The bank also said that interest rates on the new unsecured loans would have 5% p.a. lower interest rates than normal.|
In addition to these measures, CommBank also has these relief measures in place:
|Heritage Bank is now offering government backed business loans under the Coronavirus SME Guarantee Scheme and applications are now open. New and existing applicants can apply. Details are:|
Heritage also offers the following COVID-19 relief measures:
|Moula is also participating in the scheme, with loans available now to new business customers.|
Additional help to existing business customers from Moula includes:
|NAB has also agreed to partake in the government's Coronavirus SME Guarantee Scheme. Business loans up to $250,000 will be available from NAB at a rate of 4.5% p.a. with no repayments for the first six months.|
The following relief measures are also already in place:
|Prospa recently announced that it too will be participating in the scheme. Details of the new loans that Prospa will be making available are still being finalised.||More info|
|St.George Bank has also announced that it will be participating in the scheme and loans are available effective as of 23 March 2020.|
Additional support measures for businesses from St.George Bank include:
|Suncorp also announced that it will be taking part in the scheme, but is still finalising the details of its loans.|
Other measures employed by Suncorp to help small business customers include:
|Westpac announced its new business loans under the SME Guarantee Scheme on 22 March 2020. These loans will be offered at a 4% p.a. lower rate than Westpac's current unsecured business loan.|
Westpac is also offering the following support to business loan customers:
Please note that new banks are still pending approval for participation in the scheme. We will strive to keep it as updated as possible as new lenders are approved.
Ask an Expert