The government set up the scheme to help Australia’s economic recovery. Its purpose is to support SMEs with a turnover of under $250 million that were eligible for or received JobKeeper payments between January 4 and March 28, 2021. Businesses in local government areas adversely affected by the March 2021 flooding are also eligible to apply.

The scheme allows lenders to provide cheaper credit to SMEs struggling to recover from COVID-19 so they can invest in the future. Self-employed individuals and non-profit businesses are also eligible as are businesses that received loans in phase 1 and 2.

Key features of the loans

Lenders participating in the SME Recovery Loan Scheme will offer you a loan with the following terms:

• Access to up to a total of $5 million on top of the phase 1 and 2 and loan limits.
• The government guarantee covers 80% of the loan.
• Loan can be either unsecured or secured subject to terms and conditions.
• Lenders set the interest rate with the maximum capped at 7.5%. Where the interest rate increases in the market, lenders can increase the interest rate variable loans.
• You can request a two year repayment holiday.
• Loan terms are up to 10 years.

Loan uses and products

Lenders can offer you loan products that meet your needs except for the following:

• debit cards
• credit cards
• charge cards
• business cards.

Any loan product a lender offers must meet the SME Recovery Loan Scheme criteria. You can use the credit for a wide range of business reasons such as buying a commercial premises or to acquire another business. You cannot use the loan to:

• Lend to another business you are associated with.
• Buy financial products.
• Buy a residential property.
• Lease, hire or rent assets you have already had for some time.

You can refinance debt but there will be restrictions on loan refinancing. These restrictions include loans that are more than 30 days in arrears or debtors that are insolvent or under administration.

Your lender can restructure your loan at anytime as long as you are still eligible and the loan limit is not increased after being approved. They must tell you what the interest rate is at the time of signing. Where it is a variable interest rate loan, the lender must disclose the interest margin rate they will charge you.

You do not have to prove what you are going to use the funds for.

To apply for a loan

To apply for an SME Recovery Loan under the scheme talk to a participating lender. The decision to grant you a loan lies with the lender and they will manage your loan.

All lenders must receive government approval to participate in the scheme. The following currently have approval to offer loans under the SME Recovery Loan Scheme:

• ANZ
• Bank of Queensland
• Commonwealth Bank of Australia
• National Australia Bank
• Westpac
• Fifo Capital Australia
• Get Capital
• Judo Bank
• Liberty Finance
• Moneytech Finance
• Queensland Country Bank
• Regional Australia Bank
• Social Enterprise Finance Australia
• South West Credit Union Co-operative
• Suncorp-Metway
• The Mutual Bank
• TrailBlazer Finance
• Unity Bank
• Webster Dolilta Finance Ltd.

To find out more about the SME Recovery Loan Scheme, contact a participating lender. But keep in mind, applications close on December 31, 2021.