As we reported last week, there was speculation that salons would be eligible to apply for loans, to see them through after the salary payment scheme ended.
Coined the SME Recovery Loan Scheme, it’s designed to support the economic recovery, and to provide continued assistance, to salons currently on JobKeeper. The Government will work with lenders to ensure that eligible firms will have access to finance to maintain and grow their businesses when JobKeeper ends.
The Scheme is enhancing lenders’ ability to provide cheaper credit, allowing many otherwise viable salons to access vital additional funding to get through the impact of Coronavirus, recover and invest for the future.
The Scheme builds on the framework established in the two phases of the Coronavirus SME Guarantee Scheme, and is specifically targeted at SMEs currently receiving JobKeeper. The scheme is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021.
Phase 2 of the existing SME Guarantee Scheme will remain open to eligible borrowers until 30 June 2021, and SMEs with Phase 1 or Phase 2 loans will be able to apply for loans in SME Recovery Loan Scheme.
Is your salon eligible?
The scheme is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021, specifically small and medium sized businesses with up to $250 million turnover. Both self‑employed individuals and non-profit businesses are eligible. Businesses that have accessed loans in Phase 1 and Phase 2 can also apply for loans under the scheme.
Key details
Participating lenders are offering guaranteed loans on the following terms under Phase 2:
- The Government guarantee will be 80% of the loan amount.
- Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
- Loans can be used for a broad range of business purposes, including to support investment. Loans may be used to refinance any pre-existing debt of an eligible borrower, including those from the SME Guarantee Scheme.
- Borrowers can access up to $5 million in total, in addition to the Phase 1 and Phase 2 loan limits.
- Loans are for terms of up to 10 years, with an optional repayment holiday period.
- Loans can be either unsecured or secured (excluding residential property).
- The interest rate on loans will be determined by lenders, but will be capped at around 7.5 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.
How to apply
Loans backed by the Scheme will be available through participating commercial lenders. The decision on whether to extend credit, and management of the loan, will remain with the lender.
Borrowers can access credit under the Scheme through any lenders approved to participate.
For more information on how to apply, visit Information for SMEs.
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