The SME Recovery Loan Scheme – Revamped to Help More SMEs

The government is extending the SME Recovery Loan Scheme for a further six months – the scheme is now set to run until 30 June 2022.

In the summer of 2020, the government announced a revamped lending initiative targeted at SMEs with a turnover of up to $250 million. The SME Recovery Loan Scheme builds on earlier loan schemes introduced during COVID-19. The most recent of which being Phase 2 of the SME Loan Guarantee Scheme which ended in June 2021.

Eligibility for the SME Recovery Loan Scheme has been widened to better reflect the economic pressures Australia has encountered through its response to coronavirus. Originally set to expire on Dec 31 2021, it has now been extended to 30 June 2022.

Key features of the new SME Recovery Loan Scheme:

  • Australian government will guarantee 80% of the loan amount
  • Repayment can begin up to 24 months after loan was issued
  • The SME Recovery Loan Scheme can be used to refinance existing debt
  • Loan term up to 10 years with up to $5m per borrower
  • Interest rate capped at 7.5% per annum

How to check for eligibility:

Check your eligibility with, the Australian business lending marketplace. Lend works with Moneytech, Fifo Capital, and Shift (previously GetCapital) which are all SME Recovery Loan Scheme approved lenders. Using Lend will not impact your credit score. If the algorithm is not able to match you to an SME Recovery Loan, it will continue to search for alternative funding offers.


Learn about the scheme and the requirements to borrow under the scheme in this guide. If your business is not eligible and would like to consider alternative forms of finance, view our best small business loan options and Australian business grants list.

Full Breakdown Including Details of the SME Recovery Loan Scheme, Who’s Eligible and How to Apply

Following the COVID-19 outbreak in early 2020, the Australian Government announced various initiatives to support SMEs through a period of severe economic disruption. Now almost two years later and much disruption still occurring, the Government has extended the SME Recovery Loan Scheme. The original lending schemes were somewhat limited in scope but notably, the Australian Government has announced that in recognition of the continued economic impacts of the coronavirus, eligibility criteria has been widened. The previous requirements for SMEs to have received JobKeeper during the first quarter of 2021 or to have been a flood affected business have been removed. The Scheme Rules now simply state loans are available to all SMEs with a turnover under $250m who have been negatively impacted by the coronavirus pandemic.

The SME Guarantee Scheme vs SME Recovery Loan Scheme

SME Guarantee Scheme, Phase 1
SME Guarantee Scheme, Phase 2 SME Recovery Loan Scheme
50% of the loan is secured by the Government.50% of the loan is secured by the Government.80% of the loan is secured by the Government. (50% after 1 Jan 2022)
Unsecured business loans only (i.e. no security required from the borrower for the other 50%).Unsecured and secured loans possible (except for residentially secured loans, i.e. asset financing is possible).Unsecured and secured loans possible (except for residentially secured loans, i.e. asset financing is possible).
Value of the loan cannot exceed $250,000.Value of loans up to $1,000,000Value of loans up to $5,000,000 total across all 3 schemes
Loan terms up to 3 years, with a 6-month payment holiday guaranteed.Interest rates capped at 10% (wth margin of allowance for variable rate loans).Interest rates capped at 7.5% (wth margin of allowance for variable rate loans).
Loan terms up to 5 years, 6-month payment holiday at discretion of lender.Loan terms are up to 10 years, with an optional repayment holiday.

Submit Quick Application for the SME Recovery Loan Scheme

One of the major concerns in regards to the SME Recovery Loan Scheme is SPEED. In previous phases of the government SME loan scheme, businesses were waiting on banks  and lenders for weeks until they received an approval or a rejection. The biggest advantage of applying for a loan via Lend ( is that you will receive indications quickly in regards to your eligibility, and those indications will come after Lend processes your application and submits it to multiple lenders. Additionally and importantly, Lend will offer non-SME-Recovery-Loans for businesses which aren’t eligible.

Background Information and Analysis

Rather than a fixed lending amount being capped on purely the SME Recovery Loan Scheme, SMEs are able to access a total of $5,000,000 across all three phases of the Government’s SME Loan Schemes. With Phase 1 of the SME Guarantee Scheme originally capped at $250,000 and Phase 2 at $1,000,000 this could open the door for a more significant funding opportunity through the SME Recovery Loan Scheme.

The loan term has also been extended to 10 years, allowing a greater amount to be borrowed and repaid over a greater period of time. This, combined with a lowering of the interest rate to around 7.5% (with small deviation allowed for variable rate loans), should improve uptake amongst Australia’s SMEs.

The original schemes received criticism for continuing to favour lending from deposit taking institutions, i.e. banks. One of the biggest barriers to performance was that only deposit taking institutions were able to benefit from cheaper funding from the Reserve Bank of Australia. Companies that specialised in just lending, who are traditionally much faster in processing business loan applications, have not een able to benefit from the cheaper sources of funding as they are largely funded on the secondary market. And whilst this hasn’t specifically been addressed, there are a number of non-bank lenders participating in the SME Recovery Loan Scheme, including:

By applying with Lend, SMEs are matched with the most appropriate non-bank lender that is participating in the SME Recovery Loan Scheme.

Whilst Phase 2 of the SME Guarantee scheme increased the value of loans and the loan term, the SME Recovery Loan Scheme has gone a step further. The combined borrowing total of $5,000,000 particularly helps firms who are often caught in the middle of initiatives aimed to support small SMEs and the benefits a company can enjoy as a large multi-million dollar turnover business.

Key Terms of the SME Recovery Loan Scheme

Participating lenders are offering Government-backed loans under the SME Recovery Loan Scheme as follows:

  • The Government will guarantee 80% of the loan amount (falling to 50% for loans written between 1 Jan 2022 – 30 June 2022).
  • Lenders are allowed to offer borrowers a repayment holiday of up to 24 months (up from 6 months in prior schemes).
  • Loans can be utilised for a significant range of business purposes, including to support investment. Loans can also be used to refinance any pre-existing debt of an eligible borrower, including those from prior SME Guarantee Schemes.
  • Borrowers can access up to $5 million in total, when combined with the Phase 1 and Phase 2 loan limits.
  • Loans terms are up to 10 years, with an optional repayment holiday period.
  • Loans can be either secured or unsecured (excluding residential property for secured loans).
  • The interest rate on loans will be determined by lenders, but will be capped at around 7.5 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.
  • Businesses with a turnover up to $250m are eligible to apply under the scheme.

It must be noted that whilst the Government is providing a guarantee for the loan, this is not a Government SME loan.  The decision on whether to extend credit and the ongoing management of the loan remains with the lender. However, with the increased support through the SME Recovery Loan Scheme, the Government expects lenders to look through the current economic conditions and make sensible lending decisions based on the usual performance of the business and on the basis the Government will provide a guarantee for 80% of the loan (falling back down to 50% for loan issued after 1st Jan 2022).

In phase 1, the Government was encouraging lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. So there was a preference for lending solutions such as a business line of credit.

Phase 2, whilst still encouraging these types of facilities, expanded to encourage a number of secured facilities too. The SME Recovery Loan Scheme has maintained this flexibility for both secured and unsecured loans. Secured loans can include fit out finance, asset finance or any secured loan which isn’t residentially secured.

Who’s Eligible for a Loan Under the Coronavirus SME Recovery Loan Scheme?

All active Australian businesses with a turnover of less than $250 million in the previous financial year, or expected turnover of less than $250 million in the current financial year are eligible to apply for a Government SME Recovery loan. This includes individuals who are self-employed and not-for-profit businesses.

Loans no longer need to be used just to support current and upcoming cash flow requirements – business expansion is a perfectly valid reason to apply for a loan too. The only requirement is that loans, as you would expect, must be used for business purposes only. The Government has instructed lenders to satisfy themselves of this by:

  • Lending through a designated business product.
  • Seeking a declaration from the borrower.
  • Other means acceptable to the lender.

Reasons not valid for borrowing under the scheme, highlighted by the Australian Treasury, include:

  • Purchasing residential property
  • Purchasing financial products
  • Borrowing to lend to an associated entity
  • Lease, rent, hire or hire purchase existing assets that are more than half way into their effective life.

Lenders can offer any product deemed suitable for these purposes, with the exception of credit cards. Businesses are entitled to more than one loan under the SME Recovery Loan Schemeproviding the total value of all facilities does not exceed $5,000,000. Businesses who benefited from phase 1 and phase 2 of the scheme can apply through the SME Recovery Loan scheme as well.

SMEs who would like to apply can apply through who work with a wide array of participating lenders in the scheme or contact one of the participating lenders directly. Participating lenders are required to consider applications from new customers as well as their existing customer base.

Based on the data from Lend which processes SME Recovery Loan Scheme leads originated from us, we can say that the type of businesses looking for an SME recovery loan are diverse in size and industry. There are companies looking for SME recovery loans making millions in revenue each month, to ones generating below $500/m with a median average of $70,000/m in revenues. The only industry that stood out as having abnormally high level of interest was construction and building.

How Long is the Government SME Loan Guarantee Scheme Open?

The Government SME Recovery Loan Scheme has recently been extended to run until 30 June 2022, a six month extension on the original deadline of 31 December 2021. One crucial difference between loans issued prior to 31 December 2021 and after 1 January 2022 is that the government will lower the amount of the loan it guarantees from 80% to 50%. Lenders might therefore be more cautious for SME Recovery Loans issued in 2022.

Previous funding applications saw Phase 1 available between 23rd March 2020 – 30 September 2020 and Phase 2 between 1 October 2020 – 30 June 2021.

How Long is the Government SME Recovery Loan Scheme Open?

THe Government SME Recovery Loan Scheme is currently scheduled to run until the end of the year – 31st December 2021.

Previous funding applications saw Phase 1 available between 23rd March 2020 – 30 September 2020 and Phase 2 between 1 October 2020 – 30 June 2021.

Which Lenders are Participating in the SME Recovery Loan Scheme?

The Government is working with 18 participating lenders as it stands:

  • ANZ
  • Bank of Queensland
  • Commonwealth Bank of Australia
  • Fifo Capital Australia
  • Shift (previously GetCapital)
  • Judo Bank
  • Liberty Finance
  • Moneytech Finance
  • National Australia Bank
  • Regional Australia Bank
  • Social Enterprise Finance Australia
  • South West Credit Union Co-operative
  • Suncorp-Metway
  • The Mutual Bank
  • TrailBlazer Finance
  • Unity Bank
  • Webster Dolilta Finance Ltd
  • Westpac

This is a reduction on the 39 lenders participating in the previous SME Guarantee Scheme but still combines a blend of Banks, Co-operatives and Non-bank lenders. If you’re an eligible SME and would like to begin your application under the SME Recovery Loan Scheme you can do it right now with Shift (previously GetCapital) and a number of other non-bank lenders. Shift is one of the largest and most respected online lenders in Australia, with a 4.8 / 5 TrustScore on TrustPilot. If your business requires quick access to capital, Shift is used to providing a lending decision and releasing funds in under 24 hours.