SYDNEY, July 20 (Reuters) – Australia will extend a coronavirus loan guarantee scheme for small businesses and increase credit limits to A $ 1 million ($ 700,000) from A $ 250,000, Treasurer Josh Frydenberg said on Monday.
The expanded scheme, which will begin in October this year and run until June 2021, will also allow businesses with a turnover of under A $ 50 million to apply for loans to fund their investment plans.
Current rules allow businesses to use loans only for working capital purposes.
“The next phase of the coronavirus small and medium enterprise guarantee scheme will help businesses get out of hibernation, successfully adapt to COVID’s safe new economy and invest for the future,” Frydenberg said in a statement.
The government will continue to guarantee 50% of loans and the repayment period has increased to five years from three years.
Under the plan, the bank also has the discretion to offer a repayment holiday period.
The pandemic has wreaked havoc on the Australian economy and the government has pledged more than A $ 160 billion ($ 112.00 billion), or 8% of GDP, in fiscal stimulus to prop up the economy.
Australia has become one of the most successful countries in limiting the spread of the corona virus, but the outbreak in the state of Victoria has dimmed hopes of a faster and sharper economic recovery.
More than 15,600 businesses so far have submitted loans worth A $ 1.5 billion ($ 1.05 billion) in the first phase of the plan, which will end on September 30, 2020, according to government estimates.
$ 1 = 1.4286 Australian dollars Reporting by Renju Jose; Editing by Jacqueline Wong
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