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SMEs feel cold-shouldered on COVID loans

Alexandra Vanags
03 September 2021 2 minute readShare
COVID loans

The government’s SME Recovery Loan Scheme, which was extended last week, is not available to all and a different approach is needed, advocates say.

Some small businesses and their advocates claim the recently extended SME Recovery Loan Scheme is of no use to them, as lending criteria push it out of reach despite the 80% government guarantee.

One anonymous reader commented on MyBusiness’ coverage of the extension that “not one travel agent has been able to secure such funds”.

“Agreed. I am in hospitality and no one will touch us,” said another.

The Australian Federation of Travel Agents (AFTA) told MyBusiness it had been pushing for an updated approach on the lending criteria for over a year now so travel businesses who want to access this support are able to do so.

“As with so many things, the devil is in the detail and while everyone’s intentions to help are genuine, there are a few changes needed including to the eligibility criteria so that the majority of travel agents who apply actually qualify,” said Tom Manwaring, chair of AFTA.

“For way too many at the moment, it’s a flat-out no right at the start of the conversation. That’s not fair, given these were thriving, profitable businesses before the international travel ban was introduced in March 2020. They see travel businesses as high risk which seems contrary when the government’s 80% guarantee provision has been extended to 31 December, by which time we should have a clear runway to international travel resuming.”

A survey of more than 100 businesses across different states and industries by Titian Consulting, a virtual CFO service for small business, indicates similar issues. The Titian Consulting State of Small Business in COVID Times report found 70% of respondents had not availed of the SME loan scheme, and of those who tried, more than half (58%) found them very difficult to access. The major reasons cited were the length of turnaround time, lack of information available and disqualifications or a lack of clarity on access for sole traders and micro-businesses.

Also, 65% do not believe the government is providing enough support to small business and 41% want more financial assistance.

“Without the right support, explained clearly and accessed easily, we are going to lose not only these important businesses but local employers, community supporters and innovators across the country,” said Hilary O’Dwyer, founder of Titian Consulting.

In an interview with radio presenter Neil Mitchell last week, Treasurer Josh Frydenberg said more than 70,000 loans have gone out worth more than $6 billion. He said in the interview banks will put their own credit checks across the potential borrowers, but said that “because we’re guaranteeing 80%, there’s going to be a greater willingness to enter into these loan agreements with the particular business”.

Mr Frydenberg also pointed out the loan scheme is on top of the other programs that the Treasury is running to support small and medium-sized businesses, such as 50–50 grants agreed with the states which included $2 billion in Victoria for during the recent outbreak.

SMEs feel cold-shouldered on COVID loans
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Alexandra Vanags

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