Westpac Group has announced reductions to some business lending interest rates on new lending for products offered under the federal government’s Coronavirus Small-to-Medium Enterprise (SME) Guarantee Scheme.
The rate cuts have followed those announced by the major bank in November 2020, when it reduced rates by up to 56 bps.
The SME Guarantee interest rate changes for business loans, which came into effect on 1 March, include:
- The three-year unsecured fixed rate (on Business Advance) has been reduced from 4.48 per cent per annum to 3.99 per cent per annum for businesses who apply by 30 April 2021. Unsecured business loans are available up to $75,000, and director guarantees may be required; and
- Three or five-year secure variable loans have been reduced, with new rates starting from 2.99 per cent per annum. Previously, they used to start from 3.99 per cent per annum. This is applicable for a secured loan of up to $1 million when secured by a mortgage over owner-occupied commercial real estate, and customers apply by 30 April 2021.
Three or five-year fully secured fixed and fully drawn business loans have remained steady at 2.38 per cent per annum. While this is a secured loan, it is dependent on the security offered, according to Westpac.
Security supporting these loans excludes residential property or commercial/rural property that may be used for residential purposes.
Commenting on the rate reductions, Westpac business division CEO Guil Lima said that they aim to provide businesses with access to “cheap funding” as they attempt to rebuild and capitalise on growth opportunities that may become available as the economy continues to recover in the wake of the COVID-19 crisis.
“It’s pleasing to see such positive indicators the economy is starting to recover, and there’s a clear opportunity for some businesses that may be in a position to invest for future growth, which many are telling us they are looking to do,” Mr Lima said.
“We also know that some customers are still impacted and having a difficult time, and we continue to work with them and provide support through our hardship program.”
The Treasury expanded the SME Guarantee Scheme in July 2020 to “help businesses move out of hibernation, successfully adapt to the new COVID-safe economy and invest for the future”.
From 1 October, under phase two of the scheme, the maximum loan size was quadrupled from $250,000 per borrower to $1 million per borrower, while the maximum loan term was also increased from three years to five years.
The scheme is scheduled to expire on 30 June 2021.
[Related: CAFBA calls for targeted SME support]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.