Government extends loan scheme to flood-hit SMEs

Called the SME Recovery Loan Scheme, it is specifically targeted at SMEs currently receiving JobKeeper. The scheme is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021.

According to the government, the scheme was designed to help businesses by providing them with more cost-effective access to finance, more repayment flexibility, the ability to refinance existing loans into the scheme, and to better manage their cash flows through an extended loan term and lower combined repayments.

It will see government take on more of the guarantee, moving from a 50/50 backing with banks to an 80/20 split.

The expanded scheme will also increase the size of eligible loans (which can be either secured or unsecured, excluding residential property), increasing from $1 million under the current scheme to $5 million.

The Morrison government has now announced that it will extend the SME Recovery Loan Scheme, where, from 1 April, businesses impacted by the coronavirus pandemic and the recent floods in NSW and Queensland will also be eligible to access the scheme.

The government said that these flood-affected businesses will not be required to have been on JobKeeper during the March quarter to be eligible.

Extension of the scheme will allow eligible flood-affected businesses with a turnover of less than $250 million to be able to access loans of up to $5 million over a term of up to 10 years and to also be offered up to 24-month repayment holidays.

Commenting on the expansion of the scheme to flood-affected business, Prime Minister Scott Morrison said that it would enable businesses to “rebuild quickly”.

“We want businesses and producers affected by floods to get back on their feet,” he said.

“This loan extension will allow businesses to have the security of capital to develop a tailored recovery plan that works for them.”

Treasurer Josh Frydenberg also spoke of the extension, stating: “The federal government is committed to ensuring small businesses get the support they need in the face of these devastating floods.”

“The extension of this scheme will help businesses in the flood-affected areas get back on their feet.”

The Minister for Agriculture, Drought and Emergency Management David Littleproud said that the extension of the scheme would benefit businesses in regional and rural Australia.

“Businesses in the bush were already hit by COVID and the associated restrictions,” Minister Littleproud said.

“The floods might slow their recovery but not their determination.”

Major banks welcome extension

The big four banks have welcomed the government’s announcement to extend the recovery loan schemes to business affected by the floods.

ANZ managing director commercial and private lending Isaac Rankin said: “These floods came at a really difficult time as many businesses had already been reeling from the effects of the global pandemic.

“The extension of the government’s fund, along with financial assistance measures from banks such as ANZ, will provide useful support for a number of businesses as they recovery from these devastating floods.”

The Commonwealth Bank of Australia (CBA) said that businesses can now commence the application process for the recovery loan scheme (although the scheme is not yet effective for flood-affected businesses).

Commenting on the latest government announcement, CBA group executive, business banking, Mike Vacy-Lyle, said: “We are very supportive of the extension of the federal government’s SME Recovery Loan Scheme to those businesses and communities impacted by the floods in NSW and Queensland.

“While the scheme doesn’t open until 1 April, we are committed to supporting businesses through the recovery, whether from the pandemic or from the recent floods. Our teams are here and ready to help.”

The major bank said that it has contacted more than 85,000 of its business customers over the past fortnight receiving JobKeeper to understand how they are faring whether they require assistance.

National Australia Bank (NAB) also said that businesses can now register their interest for the recovery loan with the major bank.

Commenting specifically on the extension to businesses impacted by the floods, NAB’s group executive business and private banking, Andrew Irvine, said: “NAB has around 70,000 customers in the regions that have been hit by the floods – and we’re providing a range of support measures, including $2,000 cash grants, as part of a $3-million fund.

“We are pleased to support the extension of the federal government’s SME Recovery Loan Scheme to those impacted by the floods. In addition to clean-up assistance, it will provide them with the capital to restock and rebuild for the long term.

“Together, we can help get affected businesses and communities back on their feet, sooner.”

The big four banks announced disaster relief funds and emergency assistance for customers and businesses impacted by the floods, including grants and the waiver of application fees, while earlier, lenders also announced financial relief options, including loan repayment deferrals.

[Related: Major banks offer flood relief, assistance]