Guide to lenders participating in the SME Loan Guarantee Scheme
At a time when many small businesses are finding it difficult to get approved for finance, the federal government has stepped in with its SME Loan Guarantee Scheme to cut through some of the red tape.
This scheme is designed to help eligible small to medium sized enterprises (SMEs) get access to cheaper funding, as it involves the government guaranteeing a portion of eligible business loans - 50% in phase two and 80% in its latest version known as the SME Recovery Loan Scheme.
But to be covered by the guarantee, your lender must be approved to partake in the scheme. There are 39 lenders participating in phase two right now:
Bank of Queensland
Bendigo and Adelaide Bank
Community First Credit Union
Queensland Country Bank
Regional Australia Bank
Southern Cross Credit Union
South West Credit Union
The Mutual Bank
Custom Service Leasing
IQumulate Premium Funding
Social Enterprise Finance Australia
Volkswagen Financial Services Australia
With so many options on the table, you may be wondering, what’s the best government-backed loan for your business cashflow and situation? To give you a hand with shopping around, we’ve rounded up offers from five participating lenders for eligible customers.
Zip Line of Credit
- Borrow up to $500k without security
- Only pay interest on what you use
- Fee-free extra repayments
If your cashflow is unpredictable and you aren’t exactly sure about how much to borrow, then this unsecured loan from online lender Zip Business could be what you need. With Zip’s Line of Credit, you can easily bridge any cashflow gaps by drawing down on as much or as little as you need up to your approved limit, and you’ll only have to pay interest on that amount. Just bear in mind each drawdown comes with a fee of 2-3%. The Zip Line of Credit also has other great features, including the ability to make additional repayments to pay off your loan early without penalty, and to redraw those repayments should you need the extra funds later on. Plus you can choose a repayment cycle that best suits your cashflow, whether that’s weekly, fortnightly or monthly. As a tech-savvy lender, Zip allows borrowers to integrate their loan with accounting software including MYOB, Intuit QuickBooks, Sage and Xero, helping to streamline their finances. Speed is also Zip’s forte, with loan approval that could be possible in 24-48 hours after applying. To qualify, you’ll need to have been operating for at least 18 months and earned at least $200,000 in the last year.
Prospa Business Loan
- Borrow up to $300k (unsecured under $100k)
- Same-day approval available
- Extra repayments allowed
Have any urgent funding needs, like buying more stock or new equipment? Then you may want to turn your attention to non-bank lender Prospa. With this loan, you can borrow from $5,000 up to $300,000 over a period of 3-24 months, with no security required whatsoever if your loan amount is below $100,000. You’ll also have the flexibility to make fee-free extra repayments to pay off your loan sooner and save on interest. Prospa is serious about getting its loans to business customers as soon as possible, so online applications could take only 10 minutes with approval possible on the same day. Bear in mind though that to qualify, you’ll need to have been trading and receiving income for at least six months and be earning at least $25,000 a year.
Moula Business Loan
- Borrow up to $250k without security
- Approval in 24 hours
- Cashflow friendly repayments
If you’re looking for extra finance to boost your cashflow, say hello to this business loan from online lender Moula. Moula’s loan allows customers to borrow between $5,000 and $250,000 over 12-24 months, without having to put up any asset as collateral. To help you stay on top of repayments, Moula also offers repayment cycles that fit with your cashflow - either daily or weekly. Plus you’ll have handy fee-free features like extra repayments and a redraw facility at your disposal. So what are you waiting for? You could finish applying in just 7 minutes and hear back about approval in less than 24 hours. To be eligible though, you’ll need to have been in business for at least six months and make at least $5,000 in monthly sales.
Heritage Bank Fully Drawn Loan
- Choose between fixed or variable rates
- No maximum borrowing amount ($20k minimum preferred)
- Flexible repayment terms to match cashflow
If you’re after funding to support a big business investment or longer term working capital requirements, Heritage Bank’s Fully Drawn Loan could be your match. This loan is secured, so you will need to put up an asset such as your family home as collateral, but it comes with no maximum borrowing limit. There are also a wealth of flexible features to enjoy. For starters, borrowers can choose to either lock in fixed rates over 1-5 years or opt for variable rates, with the lowest rates on offer available to residentially secured loans rather than other security types. Business customers also have the opportunity to sync repayments to their cashflow (weekly, fortnightly or monthly). Not to mention they can contribute extra to their loan and make redraws on these additional repayments for a $20 fee (per redraw). Just keep an eye out for break costs which may apply if borrowers pay off their loan before their fixed term ends.
ANZ Next Step Business Loan
- Borrow up to $200k online
- No approval or ongoing account fees
- Save time with accounting software integration
For businesses who prefer to do their banking with the big four, ANZ’s Next Step Business Loan is worth putting on your radar. This online unsecured loan comes with low variable rates from 4.24% p.a. depending on your credit rating and financial circumstances, for amounts up to $200,000. While you won’t need an asset as collateral, just be mindful that a personal guarantee may be required for this loan. There are no upfront or ongoing fees whatsoever, plus you’ll have the ability to make extra repayments without penalty. Business customers can also enjoy having all their finances in one place, thanks to the ANZ’s nifty feature of integrating your business loan information into your accounting software (Xero, Intuit Quickbooks or MYOB AccountRight). With the ANZ Next Step, you could apply for amounts of up to $200,000 online and get conditional approval in just 20 minutes! But to be eligible, you’ll need to have been in business for at least 12 months, with a turnover of at least $75,000 a year.
For more information on the government’s SME Loan Guarantee Scheme, read our article on whether to expect from phase two and three. Or to weigh up even more business loans from banks and non-bank lenders, visit our business loans comparison hub.
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