Phase two of the Government Scheme: How to apply?

21 October 2020

Phase 2 of the Government Scheme is an Australian government’s extension of phase 1 of the Coronavirus SME Guarantee Scheme to support small and medium-sized businesses during COVID-19 pandemic.

What is phase 2 of the Government Scheme?

The SME Guarantee Scheme is a program set up by the Australian Government – The Treasury in response to Coronavirus.
Phase 1 of the Government’s Coronavirus SME Guarantee Scheme was launched on 23 March 2020 until 30 September 2020. The Scheme provided access to unsecured working capital loans of up to $250,000 to help SMEs (with an annual turnover of less than $50 million) to manage cash flows. Regarding phase 2 of the Scheme commenced on October 1 2020, there are new measures to meet the emerging needs of businesses applying for loans.

What do you need to be eligible for this new phase of the Scheme?

Phase 2 of the Government Scheme AustraliaIn July 2020, the Australian Government announced an extension of the SME Loan Guarantee Scheme to support the flow of credit. Phase 2 (available from 1 October 2020 until 30 June 2021) offers significant changes regarding loans:

  • Loans can be used for a broader range of business purposes, including to support investment.
  • Borrowers can access up to $1 million in total.
  • Loans can be for terms of up to five years, and a repayment holiday is not required but can be offered at the discretion of the lender.
  • Loans can be either unsecured or secured (excluding residential property).

In this second phase, Australian businesses with an annual turnover of less than $50 million are eligible to apply for loans under the Government Scheme. Self‑employed individuals and non-profit businesses are eligible to apply.

Businesses that have already accessed to Phase 1 of the Scheme can apply again for loans in Phase 2. Additional loans of up to $1 million.

How to apply for a business loan?

  1. Get in touch with a finance broker or lender.

If you want to apply for a loan under this Scheme, check the list of participating lenders in phase 2. The lenders approved to participate so far (October 2020) are:

  • ANZ
  • Commonwealth Bank of Australia
  • Community First Credit Union Limited
  • Credabl
  • Finstro Securities Pty Ltd
  • Get Capital
  • Liberty Financial
  • Metro Finance Pty Ltd
  • National Australia Bank LimitedSocial Enterprise Finance Australia
  • Westpac Banking Corporation

2) Loans of this scheme are still subject to the lender’s decision.

Despite the uncertainty of the current economic conditions, lenders will remain responsible for managing the loans and making decisions regarding credit extensions. They can decide whether to provide loan facilities or not.

3) You can compare offers from different lenders.

In case of application denied or if you are not satisfied with the current lender, you can compare different lenders and products.

Business needs under this SME Scheme.

In the second phase, the participating lenders can offer any products except for credit cards, charge cards, debit cards or business cards. Loans options can be used for different business’s needs (including to support investment) but not to:

  • residential property’s purchase,
  • financial products purchase,
  • lending to an associated entity,
  • lease, rent, hire, hire-purchase existing assets that are more than halfway into their effective life.
What about the interest rates?

Lenders will determinate the interest rate on loan based on the finance product they are offering, client’s credit score and repayment terms.

Do you need more information on the economic response to the Covid-19? Visit the Australian Government Treasury website.

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