Move comes as ASBFEO counsels SMEs to do research on lenders
The federal government is extending the Coronavirus SME Guarantee Scheme, which supports small and medium sized enterprises (SMEs) to get access to the funding.
The Australian Trucking Association (ATA) sees the extension supporting small and medium-sized trucking businesses to keep operating through the Covid-19 crisis and invest.
Under the existing scheme that now sees certain changes, the government is providing an unprecedented level of support to SMEs in partnership with 44 approved lenders by guaranteeing 50 per cent of new unsecured loans to SMEs.
The scheme is said to have already seen more than 15,600 businesses accept loans worth $1.5 billion.
Key changes to the scheme include:
- extending the purpose of loans able to be provided beyond working capital, such that a wider range of investment can be funded
- permitting secured lending (excluding commercial or residential property)
- increasing the maximum loan size to $1 million (from $250,000) per borrower
- increasing the maximum loan term to five years (from three years)
- allowing lenders the discretion to offer a repayment holiday period.
The initial phase of the scheme remains available for new loans issued by eligible lenders until September 30.
The second phase starts on October 1 and will be available until June 30, 2021.
The extension will support small and medium sized trucking businesses to keep operating through the Covid-19 crisis and invest in the future, Australian Trucking Association (ATA) chair David Smith said today.
Smith was responding to the announcement that the Government will extend the Coronavirus SME Guarantee Scheme, which supports small and medium sized businesses (SMEs) to access additional loans from participating lenders.
“Trucking is a small and family business industry. Almost 98 per cent of trucking operators are small businesses,” ATA chair David Smith says.
“Access to loans and credit is critical for businesses to meet financial obligations, invest, adapt and ultimately grow our economy.
“The ATA welcomes the Government’s commitment to supporting small business, and the critical recognition that this support must extend into 2021.”
He also notes that the Australian Government’s package of Covid-19 economic measures is supporting investment in new, safer trucks and trailers and local truck manufacturing jobs.
“Now is the time for trucking businesses to take advantage of this support for business investment, and use either the instant asset write off or the 50 per cent investment allowance to invest in new, safer trucks and trailers to keep Australia’s economy moving,” Smith says.
More information and participating lenders can be found here.
Read about the instant asset write-off extension, here
Meanwhile, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell has urged small business owners to do their homework before taking out a loan as well as to check if the lender is an Australian Financial Complaints Authority (AFCA) member.
The warning comes as the ombudsman’s office issued its second ever notice of refusal to mediate under section 74 of the Act, against lender Prudent Capital.
Carnell says her office received a request for assistance from a small business in dispute about its loan with Prudent Capital, however the lender refused to engage in mediation and proceeded to take direct action against the small business.
“I am extremely disappointed by the refusal of Prudent Capital to engage in mediation and seek to resolve the dispute in a fair way and I continue to encourage Prudent Capital to reconsider its refusal,” she continues.
“The dispute involved allegations that Prudent Capital applied substantial interest and penalties to the loan that increased through its own delays.
“It was also alleged Prudent Capital acted in ways that obstructed the small business from refinancing.
“This serves as a timely and critical reminder to small businesses to ensure the lender is an AFCA member before taking out a loan.
“Small business borrowers can only access a free and independent dispute resolution process for their financial complaints if their lender is an AFCA member.
“Not all lenders are AFCA members – in fact many are not – and small businesses need to be aware of the risks.”