$250k Assistance Loan: What you need to know

Banks have provided more direction around the information that is required for a business to receive an assistance loan.

A key point made by banks is that to receive this loan, the business must meet the bank’s assessment criteria.

The eligibility and credit criteria

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

The capacity to service will need to be evident on the final FY19 Financial Statements – prior to the pandemic.
Understanding 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 of 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 take advantage of to meet the shortfall?
Considering your industry and trading performance in the current situation, what is the likelihood that the 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 remember that even if you apply for the assistance loan, you may not be eligible to receive it.

For this reason, it’s essential to talk to your Ledge Finance Executive directly or contact our offices here for more information.

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Please note the information provided on this page is general in nature and does not constitute financial, taxation or other professional advice. You should consider whether the information is appropriate for your needs and seek professional advice prior to making any decisions.