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Australia expands loan scheme for coronavirus-hit firms, raises limit

Australia expands loan scheme for coronavirus-hit firms, raises limit

A waiter and diners are seen in a mostly empty Indian restaurant, where a business has slowed substantially since the onset of the coronavirus disease (COVID-19) outbreak, in the Parramatta suburb of western Sydney, Australia, May 29, 2020. REUTERS/Loren Elliott

SYDNEY: Australia will extend its coronavirus loan guarantee scheme for small businesses and increase the credit limit to up to A$1 million (US$700,000) from A$250,000, Treasurer Josh Frydenberg said on Monday (Jul 20).

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 the loan only for working capital purposes.

READ: Australia warns COVID-19 outbreak will take weeks to tame

"The next phase of the coronavirus small and medium enterprises guarantee scheme will help businesses move out of hibernation, successfully adapt to the new COVID-safe economy and invest for the future," Frydenberg said in a statement.

The government will continue to guarantee 50 per cent of the loan and the repayment period has been increased to five years from three years.

Under the plan, banks also have the discretion to offer a repayment holiday period.

READ: Australia's Melbourne city to make mask-wearing compulsory

The pandemic has wreaked havoc on Australian economy and the government has pledged over A$160 billion, or 8 per cent of GDP, in fiscal stimulus to shore up the economy.

Australia has been among the most successful countries in curbing the spread of the coronavirus but an outbreak in the state of Victoria has dimmed hopes of a faster and sharper economic recovery.

More than 15,600 businesses so far have applied for loans worth A$1.5 billion in the first phase of the plan, which is due to end on Sep 30, according to government estimates.

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Source: Reuters/aj

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