Coronavirus SME Guarantee Scheme

What is the Coronavirus SME Guarantee Scheme?

The Coronavirus SME Guarantee Scheme is a program that will provide small and medium sized business with timely access to working capital to help them get through the impact of the Coronavirus.



The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme will support up to $40 billion of lending to SMEs (including sole traders and not-for-profits).

Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to small and medium enterprise (SME) lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.

As part of the loan products available, the Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. This will mean that the SME would only incur interest on the amount they draw 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 funds should the need arise.



The Government will provide eligible lenders with a guarantee for loans with the following terms:

  • SMEs, including sole traders, with a turnover of up to $50 million.
  • Maximum total size of loans of $250,000 per borrower.
  • Loans will be up to three years, with an initial six month repayment holiday.
  • Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

The decision on whether to extend credit, and management of the loan, will remain with the lender. However, the Government expects that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions when determining whether credit should be extended.



All banks and non-bank lenders with an existing SME business lending line will be able to apply to participate in the Coronavirus SME Guarantee Scheme. The Commonwealth will consult with the Australian Prudential Regulation Authority (APRA) in relation to expressions of interest received from ADIs.

Small and medium businesses with less than $50 million turnover will be eligible. This will include self-employed individuals and not-for-profits.

To meet the turnover requirement, the business’s annual turnover must:

  1. Have been less than $50 million in the previous financial year; and/or
  2. Be likely to be less than $50 million in the current financial year.

The Government is seeking expressions of interest (EOI) from lenders who would like to participate in the scheme from Monday, 30 March 2020. Interested lenders are invited to complete an EOI form. Where participation is approved, lenders will be provided with a Guarantee Agreement outlining the terms of the agreement.

SMEs interested in the Coronavirus SME Guarantee Scheme should approach their financial institution for more information. The Government is working with banks and other eligible lenders to ensure loans are available as soon as possible. While the scheme officially commences from April 2020, your bank or other lenders may be able to provide credit sooner, and still benefit from the guarantee.



Applications close 30 September 2020.


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