3. Loans for working capital – (Coronavirus SME Guarantee Scheme)

The Government is providing an exemption from responsible lending obligations for six months, for lenders providing loans to existing small business customers. This applies to any loans for business purposes, including new loans, loan limit increases and loan variations and restructures.

Businesses with a gross income up to $50 million will be eligible to receive these loans. The Government will provide eligible lenders with a guarantee of 50% for loans with the following terms:

• Maximum total size of loans of $250,000 per borrower

• The loans will be up to three years, with an initial six month loan repayment holiday

• The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Loans will be subject to lenders’ credit assessment processes with the expectation they will look through this particular time and take into account the uncertainty of the current economic conditions.  The Government will encourage lenders to provide facilities so the businesses will only pay interest on the amounts that are drawn down.  If they do not draw down any funds from the facility, no interest will be charged, but they will retain the flexibility to draw down in the future should they need to.

The Scheme will commence early April 2020 and be available for new loans made by participating lenders until 30 September 2020.