The Federal Government is extending its lending guarantee package to small and medium enterprises and has also introduced a support package for the creative economy.
This note provides a brief update to our article in April entitled “Which port in this storm?”.
Non-ADI financiers should consider which funding and financial support measures are best–suited to their business, the optimal way to access funding under those measures and their interaction with existing funding and securitisation arrangements.
Guarantee of Lending to Small and Medium Enterprises (Coronavirus Economic Response Package) Act 2020 (Cth)
The initial phase of the scheme is available until 30 September 2020 and is now closed to new lenders.
Phase two of the scheme will run from 1 October 2020 until 30 June 2021, with some changes to the original scheme rules. For phase two, the rules are:
- loans can be made to SMEs, including sole traders, with a turnover of up to $50 million;
- loans can be utilised for a broader range of business purposes, including to support investment in a period of economic recovery;
- a maximum of $1million per borrower;
- loan terms up to 5 years, but the 6 month repayment holiday may now only be given at the discretion of the lender; and
- loans are unsecured or secured (but any security excludes commercial or residential property)
More details on phase two will be available in the coming weeks.
COVID-19 Creative Economy Support Package
The Federal Government’s $250 million COVID-19 Creative Economy Support Package includes a $90 million Show Starter Loans Scheme. These loans will be delivered as part of the Coronavirus SME Guarantee Scheme, with the Government guaranteeing 100 per cent of loan amounts. This will support concessional loans to assist creative economy businesses to fund new productions and events, to be delivered through commercial lenders and supported by terms and conditions tailored to the arts and entertainment sector.
ADIs and non-ADI financiers may seek to utilise these packages to offer loan products to their customers. New products may need to be developed and existing products may need to be changed, without adversely impacting on existing warehouse and securitisation programs. We can assist.
If you have any questions about this article, please contact the authors, or any member of our Banking & Finance team.
This information and contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.