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COVID-19 and Business Loans: What You Need To Know

COVID-19, or coronavirus, is all anyone can talk about at the moment. It’s all we see on the news, and for most of us, it’s all we can think about – particularly when it comes to work. Whether you’re a business owner or a sole trader, regardless of the industry you’re in, COVID-19 has no doubt had a detrimental effect on your daily operations.

Thankfully, the Australian Government has offered a range of incentives and options for business owners, to help them get through the next few months. Details are changing all the time, and you can keep fully informed on the Australian Government’s Coronavirus app.

Currently, here are some of the loan assistance offers for businesses:

SME Guarantee Scheme

The SME Guarantee Scheme has been introduced to assist small and medium enterprises (SMEs). The scheme provides a guarantee of 50% to small and medium enterprise lenders for new, unsecured loans to be used for working capital. This allows SMEs access to additional funding that will help them survive the economic downturn. Businesses with less than $50 million turnover are eligible for the following:

  • Loans up to $250,000 per borrower
  • Loans up to three years, with no payments required in the first six months
  • Unsecured financial loans, so no assets are required to secure the loan

These loans are subject to the lender’s assessment and is available to businesses until September 30, 2020.

Cash Flow Boost

Small to medium businesses and charities (non-profit) who employ workers and have an annual turnover of less than $50 million may be eligible to receive cash payments, tax-free, of up to $100,000. These can be used to pay loans, rent, electricity and staff costs.

Reduced Payment Options

Many major and small lenders have offered their current business banking customers a range of support, including deferred business loan payments, reduced or deferred overdraft repayments, and some have also waived fees.

The Big Four

Each of the big four banks is offering their own financial support to their customers. The Commonwealth Bank has announced a 1.00% reduction for all existing small business loans, and they are waiving early redraw fees on business term deposit accounts. National Australia Bank has decreased variable business loans by 1.00% and 2.00% for QuickBiz loans and overdrafts. They are also offering deferred business loan and business credit card repayments. Westpac has reduced overdrafts by 2.00% and variable cash-based loans for small business by 1.00%. You can also defer business credit card repayments for three months. ANZ has offered a 0.25% reduction in business loan rates, and 0.80% reduction in fixed secured business loans (2-3 years). You can also defer payments for six months.

Each lender is different, so check with your bank or lender to see the options available to you. And if you’d like to apply for a business loan under the SME Guarantee Scheme, or you need more information about any of the above, get in touch with our team of experienced lenders to see how we can help your business survive COVID-19.

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