Business NSW Central Coast has cautiously welcomed a recent announcement of an extension of the Federal Government’s Coronavirus SME Guarantee Scheme but says businesses remain concerned about a range of issues relating to cash flow and access to finance.
Under the existing Scheme, the Government is guaranteeing 50 per cent of new unsecured loans to small and medium sized businesses (SMEs) in partnership with 44 approved lenders, with more than 15,600 businesses having accepted loans totalling $1.5B.
This remains in place until September 30, when phase two of the scheme will kick in, allowing: extending the purpose of loans beyond working capital; permitting secured lending (excluding commercial or residential property); increasing the maximum loan size to $1M million (from $250,000) per borrower; increasing the maximum loan term to five years (from three years); and allowing lenders the discretion to offer a repayment holiday period.
But Business NSW Central Coast Regional Director, Paula Martin, says more needs to be done to reduce red tape and promote eligibility benefits to small business. Martin said a recent survey revealed that while many businesses indicated an improvement in their ability to access finance, a majority observed either no improvement (42 per cent) or only a negligible improvement (25 per cent).
“Even though interest rates for small business loans have fallen, businesses tell me it still remains difficult to secure loans,” she said. “The SME loan guarantee scheme has presented difficulties in meeting requirements not immediately apparent to the business. “Almost one in three respondents who sought additional finance indicated they were dissatisfied with their experience.
“Many respondents commented there was considerable red tape and processing delays associated with securing their loan. “Just under 50% of businesses which didn’t apply for assistance said they didn’t have a need, didn’t think their business qualified or preferred other assistance. “Taking out debt was generally an unpopular response among businesses reporting a revenue loss (17 per cent).
“This compared with downsizing operations (60 per cent), reducing staff expenses (56 per cent) and using owners’ personal funds or drawing down cash reserves (49 per cent). “This suggests many businesses are reluctant to take on debt given uncertainties about the future, as well as potential inability to access debt finance on favourable terms.” Business NSW Central Coast has cautiously welcomed a recent announcement of an extension of the Federal Government’s Coronavirus SME Guarantee Scheme but says businesses remain concerned about a range of issues relating to cash flow and access to finance.
Under the existing Scheme, the Government is guaranteeing 50 per cent of new unsecured loans to small and medium sized businesses (SMEs) in partnership with 44 approved lenders, with more than 15,600 businesses having accepted loans totalling $1.5B. This remains in place until September 30, when phase two of the scheme will kick in, allowing: extending the purpose of loans beyond working capital; permitting secured lending (excluding commercial or residential property); increasing the maximum loan size to $1M million (from $250,000) per borrower; increasing the maximum loan term to five years (from three years); and allowing lenders the discretion to offer a repayment holiday period.
But Business NSW Central Coast Regional Director, Paula Martin, says more needs to be done to reduce red tape and promote eligibility benefits to small business. Martin said a recent survey revealed that while many businesses indicated an improvement in their ability to access finance, a majority observed either no improvement (42 per cent) or only a negligible improvement (25 per cent). “Even though interest rates for small business loans have fallen, businesses tell me it still remains difficult to secure loans,” she said.
“The SME loan guarantee scheme has presented difficulties in meeting requirements not immediately apparent to the business. “Almost one in three respondents who sought additional finance indicated they were dissatisfied with their experience. “Many respondents commented there was considerable red tape and processing delays associated with securing their loan. “Just under 50% of businesses which didn’t apply for assistance said they didn’t have a need, didn’t think their business qualified or preferred other assistance.
“Taking out debt was generally an unpopular response among businesses reporting a revenue loss (17 per cent). “This compared with downsizing operations (60 per cent), reducing staff expenses (56 per cent) and using owners’ personal funds or drawing down cash reserves (49 per cent). “This suggests many businesses are reluctant to take on debt given uncertainties about the future, as well as potential inability to access debt finance on favourable terms.”
Terry Collins