SME Recovery Loan Scheme

In March, the Federal Treasurer announced an expansion of the SME Recovery Loan Scheme that has been in place since 2020. Phase one finished on 30 September; phase two started on 1 October 2020 and continues until 30 June 2021.

Applications for phase three of the scheme opened on 1 April and will be available until 31 December 2021.

For businesses that received JobKeeper from January to March 2021 and have not yet recovered to usual operations or turnover, this scheme could provide the support they need to continue. Businesses affected by the floods in March 2021, located in eligible local government areas, can also apply for loans under this scheme.

About the Loan Scheme

The Federal Government will guarantee 80% of the loan (up from 50% in previous phases of the scheme). Loans can be for up to $5 million, in addition to any loans already approved under phase 1 or phase 2 of the scheme.

The loan term may be for up to 10 years, and borrowers may take a break from repayments of up to 24 months if needed during this period.

The interest rate will be set by lenders but will be capped at around 7.5%. Loans are available through participating commercial lenders. Even if a business is eligible for the scheme, it is up to the lender to approve a loan.

Accounting Technician Next Steps 

  • Assess eligibility for the loan scheme – the business must have received JobKeeper between 4 January 2021 and 28 March 2021 and must have a turnover of less than $250 million.
  • Assess the cash flow of your clients’ businesses.
  • Review any existing debt and ability to repay.
  • Review existing loan arrangements to see if it is beneficial for the business to refinance loans under the scheme to reduce or delay repayments.
  • Discuss with them their goals for business now that JobKeeper has ended.
  • Discuss possibilities for the loan: for example, finance existing debt or invest in new technology or equipment to benefit the business.
  • Discuss plans with the tax agent.
Treasury – SME Recovery Loan Scheme