Update Coronavirus SME Guaranteed Scheme, Banks Support

30 March 2020

The link below contains useful information about the Coronavirus SME Guaranteed Scheme designed to provide small and medium sized business with timely access to working capital to help them get through the impact of the Coronavirus.

https://treasury.gov.au/coronavirus/sme-guarantee-scheme

This is our understanding of the scheme. There is no surety of access to applicants. We understand they are reviewing on a case by case basis, but the banks holistically will do their best endeavours we understand to try and roll out scheme as required.

Here is the main terms and conditions of the loan offered by one of the big 4 banks.

• No establishment fee

• No monthly fee

• 4.5% pa interest rate

• 3 year term

• No payment for 6 months (interest to capitalize)

• Then 30 months principle and interest repayment

• Director Guarantees required

• Only for working capital, cannot be used for refinance or asset purchase

Note 1: Under the SME Guaranteed Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.

Note 2: As part of the loan products available, the Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. This will mean that the SME would only incur interest on the amount they draw down. If they do not draw down any funds from the facility, no interest will be charged, but they will retain the flexibility to draw down funds should the need arise.

We also summarised some useful links from ABA & the Big 4 banks’ financial support guide.

Australian Banking Association - https://www.ausbanking.org.au/banks-small-business-relief-package/

CBA  - https://www.commbank.com.au/latest/coronavirus.html

Westpac - https://www.westpac.com.au/business-banking/small-business-relief/

ANZ - https://www.anz.com.au/promo/covid-19/

NAB - https://www.nab.com.au/personal/customer-support/covid19-help?own_cid=shortURL:covid19

Important: Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not made available to any person without our prior approval.