SME Guarantee Scheme

The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme is supporting up to $40 billion of lending to SMEs (including sole traders and not-for-profits). 

Under the Scheme, the Government is guaranteeing 50 per cent of new loans issued by eligible lenders to SMEs. The Scheme has enhanced lenders’ willingness and ability to provide credit, supporting many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus. 

The Government will work to finalise the details of the second phase in coming weeks. Expressions of interest will be sought from lenders who wish to participate in the second phase after details of the Scheme’s arrangements have been finalised and published. 

FAQ'S Sheet

Information for Small & Medium Businesses

The Coronavirus SME Guarantee Scheme will provide small and medium sized business with timely access to working capital to help them get through the impact of the Coronavirus. 

Eligible lenders are currently offering guaranteed loans up to 30 September 2020 on the following terms: 

  • Available to SMEs, including sole traders and not-for-profits, with a turnover of up to $50 million. 
  • Maximum total size of loans of $250,000 per borrower. 
  • Loans will be for up to three years, with an initial six month repayment holiday. 
  • Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan. 

From 1 October 2020, eligible lenders will be able to offer loans during the next phase on the same terms as the current Scheme with the following enhancements: 

  • Loans can be used for a broader range of business purposes, including to support investment in a period of economic recovery.
  • The maximum loan size will be increased to $1 million per borrower. 
  • Loans can be up to 5 years rather than 3 years and whether there will be a six month repayment holiday will be at the discretion of the lender. 
  • A loan can be either unsecured or secured (excluding commercial or residential property). 

Loans will continue to be subject to lenders’ credit assessment processes, with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions. The decision on whether to extend credit, and management of the loan, will remain with the lender. 
 

As part of the loan products available, the Government is encouraging 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.
 

SMEs interested in the Coronavirus SME Guarantee Scheme should approach their financial institution for more information. 
 

The Treasurer has varied the authorisation conditions for the Australian Financial Complaints Authority (AFCA) scheme to limit the matters that AFCA can consider in relation to certain decisions made by lenders under the Coronavirus SME Guarantee Scheme.
 

Under the AFCA Scheme Authorisation (Additional Condition) Amendment 2020, the AFCA Scheme Rules will be amended to limit AFCA’s ability to consider decisions made by the lender about whether to provide a loan (and the amount of the loan) under the Coronavirus SME Guarantee Scheme and ensure that when making assessments or determinations about a complaint, AFCA gives consideration to the impact of the coronavirus on the economy and the intent and requirements of the Scheme. 
 

The amendments to AFCA’s authorisation conditions also apply to decisions made by lenders (all lenders and not only those lenders that are participating lenders under the Scheme) to approve repayment deferrals for businesses in response to the coronavirus crisis. The amendments exclude from AFCA’s remit complaints in relation to decisions by lenders to offer repayment deferrals to businesses impacted by the coronavirus, and any consequential change to the amounts payable under the loan or the duration of the loan. 
 

AFCA will amend its Scheme Rules to give effect to this change and provide further guidance for businesses and lenders. The changes to the rules will apply for complaints made after 25 April 2020. 

View the list of participating lenders.