Banks have provided more direction around the information that is required for a business to receive the (up to) $250k assistance loan. The loan is a new three-year business loan of up to $250k, with a six-month deferral on repayments, of which interest will be capitalised.
A key point made by banks is that in order to receive this loan, the business is required to meet the banks assessment criteria.
The eligibility and credit criteria will apply and includes:
- Small and medium sized businesses with a turnover of less than $50 million
- Available for new lending only from 6 April 2020, approved by 30 September 2020
- The business must be based, registered and operating in Australia
- The loan must only be used to support your current and upcoming business cash flow requirements, including working capital; liquidity; and operating expenditure.
- The loan cannot be used to refinance drawn facilities, including facilities with your primary bank or another lender.
The key assessment criteria for the loan is:
- The capacity to service will need to be evident on final FY19 Financial Statements – prior to the pandemic
- An understanding of how the business is impacted by the pandemic, the actions the business has taken and how it will be able to manage through the cycle.
Questions related to the key assessment criteria above may include but are not limited to the following:
- To what extent has revenue been impacted as a result of Covid-19?
- What is your current cash flow position?
- Have you been able to defer or reduce fixed costs? (other finance payments, rent deferral/reduction, reduced staff costs, utilities etc.)
- Assuming 6 months disruption due to COVID what percentage of your working capital/ trading deficit can be met from existing cash resources or external equity?
- Apart from the assistance loan package requested are there additional assistance packages that you can avail of to meet shortfall?
- Considering your industry and trading performance in the current situation, what is the likelihood that business will quickly return to historical trading performance after a period of prolonged disruption?
- What actions have you taken already?
- What actions have you planned to take in the short-term?
- Have you prepared a Covid-19 plan?
It’s important to keep in mind that even if you apply for the $250k assistance loan, you may not be eligible to receive it. For this reason, it’s important to talk to your Ledge Finance Executive directly or contact our offices here for more information.
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