Banks welcome the SME Recovery Loan Scheme’s extension
Major banks have welcomed the Federal government’s move to extend the SME Recovery Loan Scheme by a further six months to 30 June 2022.
CBA group executive business banking, Mike Vacy-Lyle, says the scheme has been an important measure for Australian small businesses and is playing a pivotal role in the country’s economic recovery.
“We are very supportive of the extension of the scheme to allow more businesses to take advantage of this low-cost funding as we head towards the New Year,” he says.
“As the nation reopens, it’s fantastic to see recovery across the sector with many small businesses taking advantage of pent-up customer demand and investing for future growth. At the same time, we know some businesses have experienced uneven recovery and continue to need additional support to re-stock, re-hire and generally, get back to business.”
“This scheme has been a real lifesaver for businesses hit hard by COVID-19 lockdowns, so it’s great to see it extended,” adds Chris de Bruin, Westpac’s CEO, consumer and business banking.
“Westpac has played a leading role in lending to customers under the scheme, with more than $600 million in applications submitted since October.”
“In recent weeks, we’ve seen a 160 per cent week-on-week increase in applications, with the average deal size doubling since September.”
ANZ managing director commercial and private banking, Isaac Rankin, says there’s no doubt the small business sector would welcome the further extension of this scheme.
“In the last month alone, we have seen twice the number of applications for the loan scheme,” he says.
“One third of applications have come from small businesses in the retail trade, accommodation and cafe and restaurant sectors, all which have been significantly impacted by lockdowns in Victoria and New South Wales.”
Similarly, NAB group executive business and private bank Andrew Irvine says: “With Christmas just around the corner, it’s great to see all parts of the economy getting behind small businesses. The Federal government’s SME recovery loans are a good option for businesses who need additional capital, helping them stock up or scale up to make the most of bumper Christmas sales.
“I’ve visited dozens of small businesses in recent weeks. They are thrilled to have customers back on the shop floor. Knowing they can access cash gives small businesses the confidence they need to rebuild after a tumultuous two years due to lockdowns and border closures.”
Around 80,000 loans worth about $7.3 billion have been written since the scheme was started in March 2020 to support SMEs struggling to survive the COVID-19 pandemic.
As with the existing scheme, SMEs dealing with the economic impacts of COVID-19 with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.
With the economy showing signs of a strong rebound as restrictions ease, Treasurer Josh Frydenberg says the government will reduce its loan guarantee from 80 per cent to 50 per cent, helping drive a private sector-led recovery.
As part of the scheme, lenders can offer borrowers a repayment holiday of up to 24 months. Loans can be used for a broad range of business purposes, including to support investment. Loans may also be taken out to refinance any pre-existing debt of an eligible borrower. In addition, loans can be either unsecured or secured (excluding residential property).