Treasurer Josh Frydenberg has announced the extention of a $40 billion government loan program for small businesses. Picture: Sam Mooy/Getty Images
Treasurer Josh Frydenberg has announced the extention of a $40 billion government loan program for small businesses. Picture: Sam Mooy/Getty Images

$1m lifeline for small businesses

Businesses recovering from coronavirus shutdowns will be given greater support through the extension of a $40 billion government loan program.

Small and medium-sized businesses will now be allowed to borrow $1 million - four times the previous limit - with 50 per cent guaranteed by the Federal Government.

The loans issued by eligible lenders will also have terms raised from three to five years and offer repayment holidays at the lender's discretion.

Treasurer Josh Frydenberg said the new scheme terms would enable lenders to give 3.5 million small businesses access to more money at lower rates when they need it most.

"The expanded scheme will shift from providing access to working capital to helping businesses stay afloat during the crisis to now also enabling them to access more affordable and longer term credit so that they can invest for their future," he said.

Treasurer Josh Frydenberg said the Government was supporting up to $40 billion of lending to SMEs with turnover of less than $50 million, including sole traders and not-for-profit organisations. Picture Gary Ramage
Treasurer Josh Frydenberg said the Government was supporting up to $40 billion of lending to SMEs with turnover of less than $50 million, including sole traders and not-for-profit organisations. Picture Gary Ramage

More than 15,600 businesses have already taken up loans worth $1.5 billion from 44 approved lenders.

The first tranche of the scheme remains available for new loans until September 30. The second will begin on October 1 and end on June 30, 2021.

Mr Frydenberg will on Thursday reveal the future of the JobKeeper and JobSeeker schemes when he gives a budget update.

He has previously said the Government would continue providing support for people doing it tough - but was not proposing changes to the criteria to include struggling universities.

Speaking on Sunrise, Mr Frydenberg confirmed turnover tests would continue to apply to businesses receiving future support.

"If that turnover is approved sufficiently and they are opening their doors, seeing more foot traffic through their shops, then the JobKeeper program may not be applicable to them," he said on Monday.

"But for many others, particularly in sectors that rely on the borders being open, like the aviation sector, like the tourism sector, hospitality sector, the arts sector, they are going to continue to need support, and that is why we have decided to continue with a particular income support program."


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