Discussing the opportunities for small business owners to access funding from lenders

Mark Bouris sits down with Judo Bank Co-CEO to discuss Judo’s rise, the Government Guaranteed Loan Scheme for small businesses, how the economy will start to boost again and much, much more.

Who is Judo Bank?

Judo Bank is a dedicated SME challenger bank purposefully built to make it easier for Australian businesses to get the funding they need and the service they deserve.

On 3 April 2020, the Australian Government announced an additional $500 Million of funding provided exclusively to Judo Bank, cementing our unique position. This action, in addition to the recently announced Coronavirus SME Guarantee Scheme, has placed Judo Bank in a powerful position to support SMEs at this exceptionally challenging time.

Listen to the full audio episode:

Explaining the Government support measures for SMEs

The Australian Government, Reserve Bank of Australia (RBA), the Australian Prudential Regulation Authority (APRA) and State Governments have taken co-ordinated action to support the flow of credit in the Australian economy, in particular for small and medium enterprises (SMEs).

One of the key measures of support is the Coronavirus SME Guarantee Scheme.

“It’s a really unprecedented move by the government,” said Healy, “What they mean is the banks will lend up to $250,000 for working capital, on a three year term, and should the banks lose money as a result of the customer not being able to pay it back, then the government will pick up 50% of that loss.”

“The intention was to encourage banks to move and to move quickly, to support small businesses, to give them the cash, the lifeline that they need to survive in these unprecedented times.”

“And the government said ‘we’ll pick up half of any losses that you might make’. I think that was a very profound commitment by the government.”

Healy said, “The big challenge has been to operationalise that. When small businesses want to get access to that $250,000, how do they do it?”

Coronavirus SME Guarantee scheme

The Australian Federal Government recently announced that they would support Australian SMEs by underwriting a portion of certain loans issued by lenders. The structure of these loans is governed by the Federal Government, and have the following features:

  • Loans will have a maximum term of 3 years, with a mandatory 6 month repayment holiday from settlement of the loan
  • Interest will capitalise to the loan monthly during the repayment holiday
  • Loans must be for business purposes only to support current and upcoming cash flow needs
  • Loans cannot be used to refinance or service existing loans (with Judo or any other lender)
  • Customers can borrow up to $250,000 per individual ABN
  • Loans must be settled before 30 September 2020

To be eligible to apply for a loan under this scheme, your turnover needs to be less than $50m per year.

For more information on the SME Scheme, please click here to visit the Australian Government SME Scheme website.