Covid-19: Red tape removal a lifeline for business
Josh Frydenberg has removed barriers for small and medium businesses, giving them access to government-guaranteed loans and cheap credit.
Josh Frydenberg has removed barriers for small and medium businesses struggling with lockdowns and Covid-19 outbreaks, giving them access to government-guaranteed loans and cheap credit.
Under an overhaul of the SME Recovery Loan Scheme announced on Wednesday, businesses with turnovers of less than $250m will no longer be required to prove they were on JobKeeper during the March quarter or affected by floods to be eligible under the program.
The scheme, which was launched in March last year and has already facilitated 74,000 loans valued at about $6.2bn, will be available to businesses hit by the pandemic until December 31.
The expanded scheme, which includes an 80 per cent government guarantee for all eligible loans, includes provisions for lenders to offer borrowers a repayment holiday of up to 24 months.
Businesses that access the loans, which can be either secured or unsecured, can use them to support investment plans or refinance pre-existing debt.
Small and medium businesses can access up to $5m in loans from banks, with terms of up to 10 years.
The Treasurer said the expanded loans scheme would help businesses to operated through the Covid-19 restrictions and keep “Australians in jobs”.
“The Australian economy has shown remarkable resilience and an ability to bounce back throughout the pandemic,” Mr Frydenberg said.
“However, with millions of Australians still in lockdown, we need to continue to adapt our response to ensure businesses are given every opportunity to recover from these lockdowns.” The loans scheme will not only be targeted at businesses confronting outbreaks of the Delta variant and crippling lockdowns, but also those in other states and territories where tourism and hospitality operators have suffered from downturns in trade due to the internal border closures.
Mr Frydenberg said the scheme enabled lenders to “provide cheaper credit and allows many otherwise viable SMEs to access vital additional funding to get through this crisis, recover and invest for the future”.
“This comes on top of our ongoing and targeted economic, business and income support, with around $4bn in Covid-19 disaster payments made to about 1.6 million Australians since July 1 this year,” the Treasurer said.
Australian Banking Association chief executive Anna Bligh said the loans scheme was a proven measure in helping businesses “fight their way through the pandemic”.
“These changes will make a real difference. Broadening the eligibility criteria means banks can help more small businesses, and that couldn’t be more important right now,” Ms Bligh said.
“Our message is clear. If you’re in need of assistance, talk to your bank. We’re here to help.”
Under the scheme, the commonwealth entered into “risk-sharing agreements with lenders to ensure that credit continued to flow to SMEs during the peak of the pandemic”.
Since the scheme was introduced, the average loan term has been just under four years, with the average loan size across all lenders around $84,000.
Council of Small Business Organisations of Australia interim chief executive Alexi Boyd said accessing finance was crucial for businesses “struggling to reopen, re-engage with our workers and rebuild our businesses”.
More Coverage
War will end when Israel’s foes stop attacking it
Hamas began hostilities on October 7 when it invaded southern Israel and began slaughtering and kidnapping Israelis. Only an evil or foolish leader would start a war. But nations are entitled to defend themselves against attack.
Australia is not the same country — but too many are in denial
Since the October 7 attacks, Australian values have been traduced. What is happening affects the entire country and the collective impact is profound.