A lifeline for businesses- SME Recovery Loan Scheme extended

COVID-19: Insights for our community

From 1 January 2022, the Australian Government has expanded the SME Recovery Loan Scheme (SMERL)– a program designed to support the economic recovery and provide continued assistance to SMEs dealing with the economic impacts of the coronavirus pandemic.

The SMERL Scheme was initially introduced in April 2021 to enhance lenders’ abilities to provide cheaper credit to otherwise viable SMEs for additional funding to get through the Coronavirus pandemic, recover and invest for the future. The key features include a Government guarantee on lending and the offering of payment holidays to eligible borrowers.

The team at Bentleys have worked closely with a large number of SME clients to access this Scheme – and for many, it has provided welcome relief and support throughout the pandemic era.

Under the most recent scheme expansion, from 1 January 2022 to 30 June 2022 participating lenders may continue to offer guaranteed loans to eligible small and medium sized businesses with up to $250 million turnover, including self-employed and non-profits, that have been adversely affected by the Covid-19 pandemic. The following terms will apply:

  • the Government guarantee will be 50% of the loan amount
  • the expanded Scheme will not be available for loans to flood affected SMEs that are not adversely economically affected by COVID‑19
  • lenders are allowed to offer borrowers a repayment deferral of up to 24 months
  • loans can be used for a broad range of business purposes, including investment support
  • loans may be used to refinance any pre‑existing debt of an eligible borrower, including those from the SME Guarantee Scheme
  • borrowers can access up to $5 million in total, in addition to the Phase 1 and Phase 2 loan limits
  • loans are for terms of up to 10 years, with an optional repayment holiday period
  • loans can be either unsecured or secured (excluding residential property)
  • the interest rate on loans will be determined by lenders, but will be capped at around 7.5 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time

Loans issued under the Scheme can be used to refinance existing loans or for a broad range of businesses purposes (including to support investment) but cannot be used to:

  • purchase residential property
  • purchase financial products
  • lend to an associated entity, or
  • lease, rent, hire or hire purchase existing assets that are more than half-way into their effective life.

For more information on the SME Recovery Loan Scheme follow this link: https://treasury.gov.au/coronavirus/sme-recovery-loan-scheme

Learn more about Bentleys Finance here: https://www.bentleys.com.au/solutions/finance/

We are committed to supporting businesses during this challenging time. For further information or assistance, please contact your Bentleys advisor.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.