COVID-19 Small and Medium Enterprises (SME) Guarantee Scheme

Last Updated: 09 October 2020

To help businesses with cash flow difficulties under the impacts of Covid-19, the Government have introduced the Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme to support up to $40 billion of lending to SMEs. Under the Scheme, the Government will provide a guarantee of 50 per cent of new loans approved by participating lenders.

Details of the Scheme

Phase 1 of the Scheme provided eligible businesses an unsecured loan of up to $250,000 for a period of up to 3 years. Unsecured loans meaning your business will not need to provide an asset as security. It commenced on 23 March 2020 and closed for new loans on 30 September 2020.

Phase 2 is an extension of the Scheme to support businesses in recovery and to enable continued support for SMEs facing the ongoing impacts of the Coronavirus. Phase 2 of the Scheme commenced on 1 October 2020 and will be available for loans made by participating lenders until 30 June 2021.

Key features of the SME Scheme Phase 2:

  • Loans can be used for a broad range of business purposes, including to support investment.
  • Borrowers can access up to $1 million in total.
  • Loans are for terms of up to 5 years, and a repayment holiday is not required but can be offered at the discretion of the lender.
  • 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 10 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.

For more information, visit the Australian Government Treasury website.


  • Australian businesses (including sole traders and non-profit organisations) with turnover of up to $50 million in the previous financial year.
  • Businesses that assessed loans under Phase 1 of the Scheme are able to apply for loans in Phase 2.

Eligible Loan Uses

  • Lenders can offer any product suitable to the borrower, with the exception of credit cards, charge cards, debit cards or business cards. Loans issued in Phase 2 may take any other form of credit, provided the Scheme’s eligibility criteria are met.
  • Loans can be used across a broad range of business purposes, including to support investment.
  • Loans cannot be used for:
  • Purchase of residential property
  • Purchase of Financial products
  • Lending to an associated entity
  • Lease, rental, hire or purchase of existing assets that are more than half way into their effective life
  • Any refinancing purposes


Lenders offering loans under the Scheme are as follows:

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