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27 March 2020

Conoravirus SME Guarantee Scheme offers cash flow relief to small businesses

As Australian small businesses make tough decisions about their future and consider the ways they can come through to the other side of this health crisis, cash flow is key.

Small businesses with a turnover of up to $50 million can apply for loans to help with cash flow over the coming months.

Under the Coronavirus SME Guarantee scheme, small businesses – including sole traders - can apply for a loan of up to $250,000.

The Government is underwriting 50% of these new unsecured loans for SMEs to use as working capital.

To explain, the loans are unsecured and that means you don’t have to provide an asset as security for the loan.

Your bank will look at your capacity to repay the loan, but they are taking into account the uncertainty of business conditions for the foreseeable future.

The loans will be for a duration of up to 3 years, with an initial 6 month repayment holiday.

To be clear, small businesses that take up one of these loans do not need to worry about getting hit with a lump sum bill after that 6 month period.

The interest accrued during that time will be spread over the course of the loan period. You will not get a big bill.

This scheme comes into play in early April – so from next week – and these new low-cost loans will be available to small businesses until the end of September.

So how to apply? Give your bank a call and they will talk you through it.