Expanded National and NSW SME COVID Loan Recovery Initiatives
(27 August 2021 – Australia) To support small to medium sized enterprises (SMEs) struggling to cope with the prolonged impacts of COVID-19 lockdowns and restrictions, the Australian government has expanded the eligibility for the SME Recovery Loan Scheme again while “JobSaver” has also been extended to assist New South Wales (NSW) enterprises in large hospitality and tourism sector verticals.
The expansion of national SME funding applies to firms with sub A$250 million annual turnover who have been impacted by the COVID-19 pandemic. They are eligible to borrow up to A$5 million for up to 10 years at record low rates while borrowers also benefit from repayment holidays on specific products.
The government will also remove requirements for SMEs to have received JobKeeper during Q1 2021 or to have been a flood affected business in order to be eligible under the SME Recovery Loan Scheme. As with the existing scheme, SMEs who are dealing with the economic impacts of the coronavirus with a turnover of less than A$250 million will be able to access loans of up to A$5 million over a term of up to 10 years.
It will still enable SMEs to access loans which are 80 percent guaranteed by government, which have applications including capital expenditure or to refinance any pre-existing debt of an eligible borrower, including those from the SME Guarantee Scheme. Loans can be either unsecured or secured (excluding residential property) and Banks can offer borrowers a repayment holiday of up to two years. The loans will be available through participating lenders until the end of Q4 2021.
Large hospitality and tourism enterprises in NSW with sub A$1 billion annual turnover will now be eligible for JobSaver under a new extension announced by the NSW state government also as COVID “Delta” case numbers climb to a record high and the lockdown extends into its third month. Firms with annual turnover between A$250 million and A$500 million receive 40 percent of their weekly payroll at a maximum of A$300,000 a week while larger corporates with a turnover between A$500 million and A$1 billion can expect up to A$500,000 each week. The JobSaver program had only previously provided eligible businesses with revenues between A$75,000 and A$250 million with weekly payments of up to A$100,000.
The JobSaver extension follows a troubled rollout of the program through July and August with small business owners frustrated by delayed application processing and payments. Service NSW showed 208,775 applications worth A$1.6 billion in financial support have been approved for payment, out of a total of 271,896 applications seeking A$2.3 billion. A further 3,316 applications worth A$26 million were declined while 59,805 applications worth A$669 million have yet to be assessed.
“The Morrison Government is providing additional support to small and medium sized businesses who continue to deal with the economic impacts of the COVID‑19 crisis. It will enable lenders to continue supporting Australian small businesses when they need it most. The SME Recovery Loan Scheme builds on earlier loan schemes introduced during COVID‑19, under which around 74,000 loans totalling around A$6.2 billion were written. The expansion complements other financial support the Commonwealth is offering to businesses impacted by the current COVID‑19 health restrictions. The Morrison Government will continue to support small businesses as they seek to rebuild, adapt and create jobs on the other side of this crisis” commented Treasurer Josh Frydenberg.
“The impacts of the pandemic are widespread and diverse across businesses and industry sectors. Many require access to credit to help them through this period, and the expansion of SMERLS is an excellent initiative to ensure that more businesses will be able to access business lending at low rates and on flexible terms. At CBA we are firmly committed to supporting the SME sector, which is so vital to Australia’s economic recovery. We funded more than half of all the loans issued under the first phase of the scheme, and we plan to play a leading role in the expanded SME Recovery Loan scheme” stated CBA Group Executive Business Banking, Mike Vacy-Lyle.
“Over the past month, we have connected with more than one million small to medium sized business customers to alert them to the support we have available such as fee refunds or waivers, repayment deferrals, and bridging finance. Customers are telling us their key concerns continue to be about cash flow management, managing suppliers, and keeping staff employed. We know the ongoing uncertainty surrounding Covid-19 restrictions can be difficult to navigate, and we encourage our business customers to contact us to see how we can help” Mr Vacy-Lyle added.
“Given the extended Public Health Order, and the continued uncertainty on return to business as usual, many larger businesses in the hospitality, tourism and recreation sectors are especially impacted. These businesses are often large employers and are at increasing risk of letting employees go” Service NSW outlined in a statement.
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