Australia extends its loan guarantee scheme
Australia has announced an extension to its loan guarantee scheme, which will guarantee up to 80% of the loans under the programme, while also increasing the loan limit and allowing larger companies to benefit.
This comes ahead of the expiry of JobKeeper, the government’s dedicated handouts scheme for businesses that will expire by end-March.
The extended scheme will see the government’s guarantee on loans increase to an 80/20 split with the banks, an increase from the current 50/50 split.
Under the new changes, the size of eligible loans will also increase to A$5 million (US$3.88 million), from the current A$1 million (US$775,930). The turnover threshold will be increased from A$50 million (US$38.8 million) to A$250 million (US$0.19 billion).
Loan terms will increase from five to 10 years, while borrowers will be offered a repayment holiday on interest for up to 24 months. The scheme will be open to recipients of JobKeeper payments between January 4 and March 28, 2021.
“This will encourage more banks to support small businesses and demonstrates the government’s commitment to back those businesses that are prepared to back themselves,” said Treasurer Josh Frydenberg.