Westpac supports struggling SMEs

by Antony Field26 Apr 2021

Through its participation in the federal government’s loan guarantee and recovery schemes, Westpac is playing a major role in providing crucial funding to small businesses affected by the pandemic and recent flooding.

There’s no doubt Australia’s economy is one of the best-performing in the world, riding out the storms of COVID-19 better than anywhere else.

Businesses are bouncing back, more jobs are available, and there’s an air of confidence as vaccinations roll out and international travel slowly returns.

But there are still bumps in the road, with heartbreaking floods in NSW and Queensland damaging and in some cases destroying the livelihoods of small business owners.

Other SMEs, especially those most heavily affected by the pandemic, namely in tourism, travel and hospitality, have continued to struggle. JobKeeper, a lifeline for many SMEs, has now also ended.

This is where the federal government’s $40bn Coronavirus SME Guarantee Scheme has been so important in supporting the flow of credit to SMEs. Phase 1 of the scheme, which started in March 2020 and ended on 30 September 2020, provides lending to SMEs (including sole traders and not-for-profits) by guaranteeing 50% of new loans issued by participating lenders.

Phase 2 of the SME Guarantee Scheme came into effect on 1 October and is open for loans with participating lenders until 30 June.

The new SME Recovery Loan Scheme builds on the framework established in the two phases of the Coronavirus SME Guarantee Scheme and is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021 and businesses located or operating in eligible local government areas impacted by the floods in March.

Greg Pell, Westpac’s general manager of equipment finance and commercial introducers, says Westpac has supported all phases of the government’s SME Guarantee Schemes since their initial induction in March 2020.

“This includes announcing our offer under the latest federal government SME Recovery Loan Scheme, which is helping to provide businesses with access to low-rate finance for those that need more time and support to get back on their feet following the impacts of COVID-19 and recent floods.”

Pell says small businesses from a range of sectors have taken out loans under Phase 2 of the government's SME Guarantee Scheme, including mining, manufacturing, wholesale, retail, transport and construction.

“Customers are taking advantage of record-low interest rates and incentives to invest in office equipment, machinery and business stock, or have been using the finance to buy larger business premises,” says Pell.

With the deadline approaching for SME applications for finance under Phase 2 of the SME Guarantee Scheme, Westpac has reduced interest rates on some of its fixed and variable rate products to provide further opportunities for businesses to access funding.

“Westpac is committed to helping Australian business succeed and grow, and providing low rates is one way of doing that.

Pell says Westpac loans under the new SME Recovery Loan Scheme will provide a further lifeline to businesses that need more time and support to get back on their feet.

Westpac knows many businesses have put off upgrading equipment and technology due to cost.

“As part of Phase 2 of the SME Guarantee Scheme, together with the federal government’s instant asset write-off scheme expansion, we’ve seen businesses use the funds to purchase new equipment to help them make essential improvements to grow, become more competitive and sustainable,” says Pell.

Businesses investing in vehicles and technology, and using the funds to support cash flow, have been able to adapt, innovate and pivot their offering or expand by employing more staff.

“Similarly, for businesses wanting to access finance as part of the SME Recovery Loan Scheme, they can use the funding for commercial and business purposes, including additional working capital, purchasing equipment and commercial property.”

Westpac’s broker network also has an important role to play.

“We are supporting brokers by helping them support their customers,” Pell says. “One of the ways we’re doing this is by reducing our rates on the Phase 2 SME Guarantee Scheme loans and announcing our offer under Phase 3, this time called the SME Recovery Loan Scheme.

“These support measures are communicated to our broker network, and we encourage them to start conversations with their clients as many small businesses move into a position to invest for future growth.”

Pell says Westpac’s business development managers and senior partnership managers can explain to brokers which clients may be eligible, to support them in rebuilding and thriving after these challenging times.

“We hold regular briefing sessions with our BDMs and senior partnership managers and have an internal knowledge hub to keep them up to date with the latest changes to rates and offers, arming them with the right information to help brokers.”

Residential brokers who don’t have commercial or asset finance experience but want to help their clients who may be eligible for the loan scheme should reach out to their Westpac BDM or senior partnership manager in their state, or connect through their residential BDM or via the Westpac website.

Apart from through the government loan schemes, Pell says there are other ways Westpac is supporting SMEs.

“There are many small businesses who are recovering well from the pandemic, but for some sectors, particularly those hit hard by international border closures, there is still a way to go before normal trade resumes. If you have business customers still doing it tough, we encourage you to contact us so we can work through what options may be available for them. We take a tailored approach to each business, but the most important first step is starting the conversation with your broker or calling us direct.”

Education is another key focus for Westpac in assisting SMEs.

“To ensure our customers have the right strategies in place to recover from COVID-19, we are offering 1,000 small business customers access to a free 12-week TAFE course,” Pell says.

Businesses can also go online to the Westpac Help Hub to access resources and tips from some of Australia’s most innovative businesses.

For business customers impacted by the recent floods, Westpac is offering a range of support. This includes establishing a flood support fund with up to $10m available, from which business customers can access $5,000 grants to assist with the recovery and reopening process.