On 1 April 2021, the federal government launched the SME Recovery Loan Scheme as a replacement for the JobKeeper Payment Scheme. Read on to learn the essential details you need to know regarding this new initiative.

What is SME Recovery Loan Scheme?

The SME Recovery Loan Scheme aims to support the Australian economy and provide assistance to eligible small and medium-sized businesses that received JobKeeper and also to eligible flood-affected businesses. Under this scheme, eligible firms can take out a loan from qualified lenders and use it to maintain and grow their business.

This scheme will be available from 1 April 2021 until 31 December 2021.

How Can You Apply?

The government is not directly involved in the lending process. Instead, you will need to file your application to any of the participating lenders. The approval, management, and extension of your loan will remain at the lender’s discretion. The treasury department also recommends shopping around and comparing loan offers before applying for one.

To know the exact process and requirements, contact a lender in your area.

Are You Eligible for this Scheme?

To qualify, you must:

  • Be a recipient of the JobKeeper payment between 4 January 2021 and 28 March 2021.
  • Be an SME with up to $250 million turnover

In addition to these criteria, these group can also apply

  • Self-employed individuals and not for profit organisations
  • SMEs with operations in areas affected by the March 2021 floods. There are 64 eligible Local Government Areas (LGAs).

How Much Can You Get?

Participating lenders can offer up to $5 million in total, on top of Phase 1 and Phase 2 loan limits of the Coronavirus SME Guarantee Scheme.

What Can You Expect?

Here are the key features of this scheme:

  • Government guarantee of up to 80% of the loan amount.
  • You can use the loans for various business purposes such as support investment.
  • You can use the loan to refinance pre-existing debt like the SME Guarantee Scheme.
  • Its terms are up to 10 years, with an optional repayment holiday period.
  • Lenders can offer you a repayment holiday of up to 24 months or two years.
  • Loans can be either unsecured or secured (excluding residential property).
  • Lenders will determine the interest rates. However, it should be capped at around 7.5% with some flexibility for interest rates on variable rate loans to increase in case market interest rates grow over time.
  • Loan applications should be approved before 31 December 2021.

Where Can You Use the Loan?

You can use the loans issued under this scheme for any business activities, including loan refinancing and support investment. However, you cannot use it for the following purposes:

  • Purchasing of residential property
  • Buying of financial products
  • Lending to any affiliated entity
  • Leasing, renting, hiring, and purchasing of existing assets that are more than halfway into their effective life

For more information about this scheme, visit the Treasury’s official website.


The federal government is doing its best to recover the damages caused by the pandemic and other recent disasters. There are various initiatives such as the JobMaker Hiring Credit Scheme and the instant asset write-off.

If you need assistance, see if the available schemes apply to your business.

Let Us Help

If your business has a turnover of over $1 million, ABJ Solutions is offering a complimentary one-hour meeting to help answer questions and model critical decisions with you. Get in touch with us today so that we can help guide you through these challenging times.

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