Business guide to Coronavirus

What is the SME Guarantee Scheme and are you eligible?

Yes, times are tough, but the SME Guarantee Scheme may be a beacon of hope for eligible small businesses. These loans are set to provide a crucial financial boost to business owners affected by COVID-19. Find out exactly what this means and if your business is eligible.

What is the updated SME Guarantee Scheme?

The Coronavirus SME Guarantee Scheme was first announced as part of the government’s $66 billion stimulus package back in March. Under this part of the scheme, businesses are able to borrow as much as $250,000 in unsecured loans for up to three years until 30 September 2020.

In light of recent developments, the scheme has now been extended beyond September to offer eligible businesses part-guaranteed loans of up to $1 million. It’s set to provide up to $40 billion of financial support to Australian SMEs.

How does it work?

With the scheme, the government guarantees 50% of new loans issued to small-to-medium businesses, including sole traders and non-profit organisations with a turnover of up to $50 million. As a result, contributing lenders can offer eligible businesses secured and unsecured loans of up to $1 million per borrower for an extended duration of up to five years starting on 1 October 2020.

Is my business eligible?

You may be eligible if your business falls into the SME category with an annual turnover of less than $50 million, however, the Treasury maintains that “the decision on whether to extend credit, and management of the loan, will remain with the lender”.

What can the loans be used for?

That’s largely up to you, as long as you can substantiate your business requirements. While loans will still be subject to lenders’ credit assessment processes, loans can be used for a broader range of business purposes including, as the Treasury suggests, “to support investment in a period of economic recovery”.

Can you get money as and when you need it?

One of the more recent updates is that the Government is encouraging lenders to approve loans as and when the SME needs it – with the idea being that they only incur interest on the amount they drawdown (or borrow). This means if your business is approved for the loan but you don’t use it, no interest will be charged. However, you will retain the flexibility to borrow funds when the need arises.

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How can I apply?

Approach your own financial institution first. If they are unable to help, look more broadly. The Treasury has approved 44 lenders to participate in the Coronavirus SME Guarantee Scheme including the big four (ANZ, CommBank, Westpac, NAB) and a number of credit unions, building societies and mutual banks. You can find the full list of participating lenders here.

As Australia reels from the resurgence of COVID-19 cases in Victoria and New South Wales, businesses face a second wave of increased economic uncertainty. The SME Guarantee Scheme can provide another much-welcome financial lifeline for Australia’s business landscape.


Stay up to date with the most recent COVID-19 announcement relating to your business here. You can also explore our free Business Guide to Coronavirus for dedicated advice, support and solutions to help your business through these uncertain times.