ANZ plans lending ramp-up to give SMEs shot in the arm

ANZ is gearing up for a lending blitz following the expansion of the federal government’s SME recovery loan scheme.

ANZ says it is ready to help businesses affected by Covid-19 following the expansion of the government’s SME recovery loan scheme. Sarah Picture: NCA NewsWire/Sarah Matray

ANZ is gearing up for a lending blitz following the expansion of the federal government’s SME recovery loan scheme, giving small and medium businesses a much-needed shot in the arm as the nation eyes freedom from lockdowns.

The government in late August announced changes to the eligibility criteria for the scheme, removing requirements for SMEs to have either received JobKeeper during the March quarter or to have been flood-affected.

The widening of the scheme would mean businesses looking to expand and grow could now take advantage of the generous terms and low rates on offer, rather than just those fighting for survival, ANZ managing director for commercial and private banking Isaac Rankin said.

“Any business that’s been impacted by Covid can now apply for a loan under this scheme, and so we see that as significant,” Mr Rankin told The Australian.

“That broadening of criteria is a good opportunity for businesses. A lot of businesses, which aren’t just fighting for survival but actually have good prospects will now be able to access loans under the scheme, allowing them to rebound and grow.”

The expansion of the scheme, which ran until December 31, would boost the economic recovery as NSW and Victoria edged closer to coming out of lockdown, he added.

“To have the rebound we’d like to see, we’ve got to have a few things present: businesses need to have access to funds and they also need confidence,” he said.

“The future doesn’t have to be massively rosy, but businesses need to have some confidence and predictability and they need to believe it’s not going to be worse in the future than it is now.

“That’s when we’ll start to see people invest, and I think this is one of the building blocks towards that.”

ANZ’s Isaac Rankin.

The take-up of the earlier, more restricted scheme had been low, Mr Rankin said.

“There was a fairly small overlap of businesses that qualified and were confident to borrow more money,” he said.

“We only want to lend to people who can afford it. It’s not a great idea to try to borrow money if you don’t have reasonable prospects of repayment. And that’s been the challenge, the narrowness of the scheme previously.”

The scheme, which has been running since April, is open to businesses with a turnover of less than $250m, allowing them to access loans of up to $5m over a term of up to 10 years, with the government guaranteeing 80 per cent of the loan.

Lenders can offer borrowers repayment holidays of up to 24 months and the loans, which can be either secured or unsecured, could be used for a broad range of business purposes, including to support investment.

While lenders determine the interest rate on the loans, the rate is capped at around 7.5 per cent under the terms of the scheme, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.

For businesses taking advantage of the scheme, loan approval must be received by December 31 and loans must be drawn down within 90 days.