The Federal Government has begun its first round of lending offers to banks and financial institutions under the Coronavirus SME Guarantee Scheme which supports small and medium sized businesses (SMEs) get access to working capital.
The program, which was one of the first pillars of support to be announced, will see the government support up to $40 billion of lending to SMEs with turnover of less than $50 million, including sole traders and not-for-profit organisations.
The government will guarantee 50% of new loans issued by eligible lenders until 30 September 2020.
The government has made offers to 29 banks and five non-bank lenders in response to expressions of interest which will total $34 billion of potential lending to SMEs.
Applications from a range of other lenders are currently being assessed for the remaining $6 billion in the scheme.
The program's rules have also been finalised following consultation with lenders and stakeholders to ensure the scheme provides the required support to SMEs during this period.
A list of participating lenders will be available on the Treasury website once the offers to lenders have been accepted.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
- SMEs, including sole traders, with a turnover of up to $50 million.
- Maximum total size of loans of $250,000 per borrower.
- Loans will be 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.