Understanding the Business Finance Guarantee Scheme: What You Need to Know
The Business Finance Guarantee Scheme is a government-backed initiative that provides support to businesses affected by COVID-19. Launched in April 2020, the scheme aims to help small to medium-sized enterprises (SMEs) access the funding they need to continue operating during these uncertain times. This article aims to provide a comprehensive overview of the scheme and what it means for businesses.
What is the Business Finance Guarantee Scheme?
The Business Finance Guarantee Scheme is a government initiative that is designed to help businesses impacted by COVID-19 access finance. Under the scheme, the government guarantees 80% of the debt finance provided to SMEs by accredited lenders. This means that lenders are more likely to provide finance to businesses that they consider risky, as they are protected by the government guarantee.
Who is Eligible for the Scheme?
The Business Finance Guarantee Scheme is open to small to medium-sized enterprises that have been operating for at least six months prior to the pandemic. Businesses must be able to demonstrate that they have been negatively impacted by COVID-19 and require financing to continue operating. Eligible businesses can access loans of up to $5 million for a term of up to three years, with access to deferred payments for up to six months.
How Do You Apply for the Scheme?
To apply for the Business Finance Guarantee Scheme, businesses must approach accredited lenders directly. Accredited lenders include major banks and non-bank lenders, who have signed up to participate in the scheme. Businesses will need to provide lenders with information about their financial position and how the pandemic has impacted their operations. Once approved, the lender will provide the business with the finance they need, with the government guaranteeing 80% of the loan.
What Are the Benefits of the Scheme?
The Business Finance Guarantee Scheme provides a lifeline for businesses impacted by COVID-19. It makes it easier for businesses to access finance, even if they have been turned down in the past. The government guarantee also provides lenders with greater security, meaning that they are more willing to lend to businesses that they may have considered too high risk before the pandemic.
Conclusion
Overall, the Business Finance Guarantee Scheme is an important initiative designed to help SMEs weather the storm of COVID-19. By guaranteeing debt finance, the government has made it easier for businesses to access the funding they need to keep operating. If you are a business owner that has been impacted by the pandemic, you should consider approaching an accredited lender to explore your options under the scheme.
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