Have "responsible" lending practices come back to
bite?!
When the COVID-19 pandemic caused an Australia-wide lockdown in
March this year, both Federal and State Governments were quick to
implement stimulus and policy intervention to support struggling
businesses. One stimulus measure is the SME loans guarantee scheme,
which involves the Federal Government accepting 50% of the risk on
unsecured loans to SMEs from approved lenders.
Not surprisingly, and despite the scheme being extended until
June 2021, there has been little take up – with approved
loans under the program totalling only $1.5b of the $40b loan
capacity under the scheme. While reasons for the low rate of take
up may reflect a lack of willingness to take on more debt during
incredibly uncertain times (which still has to be repaid one day),
perhaps the bigger reason may lie in the fallout from the Banking
Royal Commission.
