Bank chief executives have backed the Morrison government’s revamped loan scheme which is provide up to $40 billion in loans to aid in the recovery of small and medium sized businesses.

21 July 2020

Under the initial 50% guarantee on unsecured loan scheme, 15,600 small and medium-sized enterprises (SME) have accepted loans worth $1.6 billion which is well sort of the $40 billion loan capacity that was originally budgeted for.

This lack of activity underpinned the case for another phase of the scheme which is designed to assist businesses moving out of the pandemic.

Kicking off on October 1, the changes for this new loan scheme phase are outlined below:

• Loans will be provided for purposes other than working capital;

• Secured loans (excluding commercial or residential property) will be permitted in addition to unsecured loans;

• The maximum loan size will increase four-fold to $1 million, up from $250,000 per borrower;

• The maximum loan term will increase to five years, up from three years; and

• Lenders will have additional discretion to offer repayment holidays.

 In addition, this extended loan program will also provide SMEs with additional access to finance over the second phase of JobKeeper payments, which will be announced on today.

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