NSW, Vic get lion’s share of SME scheme: CBA

Tasmania, the Northern Territory and South Australian businesses received a combined 14 per cent, while Western Australia received 6 per cent.

CBA group executive for business banking Mike Vacy Lyle said he was not surprised that the largest take-up of funding was by NSW and Victorian businesses, given the stricter measures that have been in place and the extended restrictions in Victoria.

“Obviously, different lockdown measures have impacted some businesses more than others,” he said.

“Not surprisingly, given the uncertainty about the timing and trajectory of the recovery, demand for credit has been somewhat modest, but I expect we will see an increase in demand with the expansion of the scheme terms.”

The major bank reported that it has approved more than $875 million in loans to 9,400 small and medium businesses through the first phase of the scheme.

Across industries, almost one in five customers of the scheme – or 17 per cent – was in property and business services, while 16 per cent were in retail trade, 14 per cent were in construction and another 14 per cent worked in the accommodation, cafes and restaurants sector.

The federal government recently opened the second phase of its Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme, quadrupling the maximum loan size from $250,000 to $1 million per borrower, allowing secured products and increasing from its current three-year limit to five years.

In July, it was announced that the government would be extending the scheme in phase 2 to allow secured lending and increase the maximum loan size and terms in an effort to provide greater utility.

Under the second phase, which will be available for loans made by participating lenders until 30 June 2021, SMEs will be able to access the scheme to use loans for more than just working capital (so that a wider range of investment can be funded) and secured lending will be allowed (excluding commercial and residential property).

Businesses and not-for-profits with annual turnovers up to $50 million are eligible to apply.

“This next phase of the scheme will allow some businesses to continue to trade through ongoing challenges, and others to make important investment decisions that will set them up for the future,” Mr Vacy Lyle said.

“The flow of credit into the economy will underpin the country’s economic recovery, and small businesses play a very big part in this.”

He added that the business measures announced in the federal budget last week has resulted in customer interest in funding through the scheme.

The first phase of the scheme saw limited uptake of loans, with Treasury figures showing the scheme had supported just 15,600 business loans worth $1.5 billion up to July 2020, while the entire package was up to $40 billion.

The scheme was criticised by various quarters, including banks, non-banks and brokers.

[Related: Majors, GetCapital appointed to SME Guarantee Scheme panel]