SME Recovery Loan Scheme

What is the SME Recovery Loan Scheme?

The SME Loan Recovery Scheme is designed to support small businesses struggling due to the coronavirus pandemic and extended lockdowns throughout 2020 and 2021. The loans are worth up to $5 million, and are an extension of the existing SME Guarantee Scheme.

Not only are the loans designed to support Australian businesses that have been impacted financially from the covid-induced economic downturn, but the government hopes they will also help to prop up the economy.

Here's who is eligible for the loans, the loan details and how to apply for one.

Is your business eligible?

Your business is eligible for the SME Recovery Loan Scheme if it has a turnover of up to $250 million and meets at least one of the following:

• Your business received JobKeeper payments between 4 January 2021 and 28 March 2021, or
• Your business was impacted by the floods in March 2021, or
• Your business has been greatly impacted by the coronavirus pandemic.

The scheme is also open to self-employed individuals and non-profit organisations, provided the above criteria is met. If your business has previously accessed a loan under the previous SME Guarantee Schemes you're still eligible to apply again for this new extended scheme.

What are the loan details?

The business loans are offered via commercial lenders including the Big Four banks, as well as smaller lenders including Judo Bank and GetCapital. However, the government is guaranteeing 80% of the loan amount.

The loans are up to $5 million in total and can be either secured or unsecured, and for a repayment period of up to 10 years. Lenders are also able to offer a repayment holiday period of up to 24 months, but they aren't required to do so. The interest rate offered is determined by each lender and will generally be capped at 7.5%.

What can I use the SME Recovery Loan loan for?

The loan is designed to support SMEs with their recovery following the coronavirus pandemic, and can be used for many different things. If eligible, your business can use the loan for a number of purposes including:

• To refinance existing debt
• To purchase commercial property
• To acquire another business
• To invest in new assets, technology or equipment

You can't use the loans issued under the scheme to:

• Purchase residential property
• Purchase financial products
• Lend money to another entity
• Lease, rent or hire existing assets

Which lenders are participating in the SME Recovery Loan Scheme?

Comparing some the Major Banks' options

Public information about these loans isn't widely available. This makes sense given the loans will be largely customised to each business. However, we've outlined the available rates and information from the Big Four banks and BOQ in the table below (correct as at 12 October 2021).

How to apply for a loan

If your business is eligible, you can apply for a loan before 31 December 2021.

You need to apply directly through a commercial business loan lender rather than applying via the government. The lender will assess your application and determine the specific loan terms, and the lender also has the right to decline your loan application.

As the details of the loan (including the interest rate, term length and the option for a repayment holiday) are at the discretion of the lender, the government has encouraged businesses to shop around and compare business loans before applying for a loan under this new scheme.