Jobs Australia CEO Member Update: Bridging Finance and other Financial Implications of COVID-19 - 1 April 2020

Member Information
from the office of
Jobs Australia CEO
1 April 2020

 

Good Afternoon,
 
So many questions, so many pieces of information to interpret, so many aspects of what is going on to try and decipher, for Jobs Australia and our Members.

My head is spinning – how about you?

Always mindful of what is most relevant to assist membership, the team has considered a number of your queries about bridging finance and other financial implications of COVID-19. 
 
This summary below is taken from the Treasury website – www.treasury.gov.au Jobs Australia hope the below may assist in your understanding of the information.
 
Require Bridging Finance
Coronavirus Small-Medium-Enterprise (SME) Guarantee Scheme - supporting the flow of credit
 
The Federal Government will provide a guarantee of 50% to SMEs for new unsecured loans to be used as working capital. The  Federal Government will provide eligible lenders with a guarantee for loans with the following terms: 

  • SMEs, including sole traders, with a turnover of up to $50 million
  • Maximum total size of loans of $250,000 per borrower
  • Loans will be up to three years, with an initial six-month repayment holiday
  • Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan. 

How do I access the Scheme?
Loans backed by the Scheme will be made available via commercial lenders. The Government is not directly participating in the lending process.
 
SMEs interested in the Coronavirus SME Guarantee Scheme should approach their financial institution for more information. The Government is working with banks and other eligible lenders to ensure loans are available as soon as possible. While the scheme officially commences from April 2020, your bank or other lenders may be able to provide credit sooner, and still benefit from the guarantee.
 
What types of businesses will be eligible for loans under the Scheme?
Small and medium businesses with less than $50 million turnover will be eligible. This will include self-employed individuals and not-for-profits
To meet the turnover requirement, the business’s annual turnover must:

  • Have been less than $50 million in the previous financial year; and/or
  • Be likely to be less than $50 million in the current financial year. 

Are there any restrictions on the size and term of loan products that can be offered under the Scheme?
A borrower (as defined as by an ABN) must not access more than $250,000 under the Scheme, and may only access the Scheme through one lender. However, this could include taking out multiple loan products up to $250,000 in total with one lender. There is no minimum loan size.

Loans issued under the Scheme must have terms of up to three years. Terms for individual loans should be determined by individual lenders. Principal and interest must be repaid by the end of the loan term.
 
I am a not-for-profit. Am I eligible for the Scheme and how do I access it?
Not-for-profits are eligible for the Scheme, provided they have turnover of less than $50 million and have an ABN. As is the case for other businesses, non-profit bodies will be eligible for loans of up to $250,000 via commercial lenders participating in the Scheme.
 
Non-profit bodies seeking to apply for the Scheme should contact their current financial institution or any other participating lender.
 
When can loans be issued under the Scheme?
Loans that meet the eligibility criteria can be issued from 23 March 2020. Loans must be approved by 30 September 2020 in order to be covered by the guarantee.
 
What are the interest rates of the loans?
Interest rates will be determined commercially by lenders. Businesses are encouraged investigate options before committing to a loan under the Scheme.
 
What happens if I cannot repay the loan?
Borrowers are fully responsible for repaying the loans made under the Scheme. If the borrower is unable to meet repayments, lenders will follow usual default processes.
 

As always – Stay healthy

 
Debra Cerasa
Chief Executive Officer
Jobs Australia


This information is general in nature to offer assistance to Jobs Australia Members and is correct to the best of our knowledge at time of release. Seeking your own legal and financial assistance, is advised.