The Federal Government has chosen to extend its small and medium-sized enterprise loan scheme. The SME recovery loan scheme will be an adaptation of the SME Guarantee Scheme which was introduced in March 2020. The scheme provides loans of up to $5 million, 80% of the loan is guaranteed by the government and 20% is paid by a participating bank.
To be eligible for the new scheme, businesses must have received JobKeeper between January 4 and March 28 2021, and must a turnover of either $250 million or less. Self-employed workers and non-profit businesses are also eligible for the loan.
Businesses can use the loan to support investment or refinance pre-existing debt which includes debt from the original SME guarantee scheme. The loans are also eligible to be used to purchase a commercial property or to purchase another business. The scheme cannot be used to purchase a residential property, financial products or lease, hire, rent or purchase existing assets that are more than half-way into their effective life.
The loan will be available for a term of up to 10 years and will include an option for a repayment holiday period. Banks’ lending the money to the borrowers can offer the business a repayment holidays of anywhere up to 24 months.
The loans that fall under this scheme must be approved before 31 December 2021. The interest rate applied to the loans will be decided by the lenders. The interest rate will be set at a cap of around 7.5%. The federal government has revealed that there will be some flexibility available for interest rates on variable rate loans to rise, if market interest rates increase in the future.
Assisting Australia’s Tourism Industry
As part of the expansion of the $1.2 billion SME Guarantee Scheme the government is offering half-price flight tickets and direct support to help “keep planes in the air and airline workers in their jobs”.
The half-price ticket program will be operating in 13 of Australia’s most popular tourism regions. These include; the Gold Coast, the Sunshine Coast, the Whitsundays, Cairns, Mackay region (Hamilton Island and Proserpine), Lasseter and Alice Springs, Devonport and Burnie, Launceston, Broome, Avalon, Merimbula and Kangaroo Island.
The number of flights, routes and tickets will be based on the public’s demand and the government is still in discussions with the airlines to confirm the exacts numbers which will be available.
The discounts will be off the average fare and will be available to purchase on airline websites from 1st April 2021.
A $50 million Business Events Grants Program has also been extended by an additional three months. This project will support Australian businesses who hold multi-day businesses events. Under the program the government will cover up to 50 percent of the costs incurred in participating business events during 2021 to help restart Australia’s business events sector.
A $94.6 million Zoos and Aquarium program has also been extended by six months. This government program will assist zoos, wildlife parks and aquariums to maintain their animal populations where their pre-covid tourism revenue has been impacted as a result of social distancing restrictions and travel bans.
The Covid-19 Consumer Travel Support Program has also be extended for an extra three months after 13th March 2021.
Despite the Australian economy having recovered 85 percent of its fall from the covid-19 pandemic, the tourism industry is one of the key industries that is still doing it tough financially.
It is expected that there will be around 800,000 half-price airfares to get Australians travelling and supporting tourism operators, travel agents, businesses and airlines who continue to struggle through the covid-19 pandemic, while Australia’s international borders remain closed.
The governments new support packages will encourage more tourists to visit hotels, cafes and take tours. This will consequently lead to more jobs being created in the aviation, tourism and hospitality sectors.
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