The Reserve Bank has reduced banks’ core funding ratios, which makes it easier for them to provide credit to businesses. Under the BFGS, businesses turning over between $250k and $80 million will be able to apply to banks for loans of up to $500k for a period of up to three years. The loans are intended to meet urgent liquidity needs arising from the fallout from COVID-19 – and not for capital projects, dividends or refinancing existing debt. The loans will have 80 percent of the risk guaranteed by the Government, with the banks guaranteeing the remaining 20 percent.
Each bank’s lending criteria will be different, but here’s what you can expect the bank to require from you:
A solid understanding of the impact of COVID-19 on your business – as well as your plans around emerging from this.
Your intended use of the funds – probably accompanied by financial projections covering the period of the loan and the intended use for the funds.
The business’ latest financial statements – year ended 31 March 2020 will be ideal. The banks will want to see that the business is solvent as well as to get a sense of the pre COVID-19 performance.
The business’ tax position.
Probably an updated personal statements of position of the directors.
For your info, here are links to each of the major banks’ pages that deal with the Business Finance Guarantee Scheme:
The Government has deemed certain industries to be ineligible for the BFGS – including property development, property investment and agriculture.