The government’s SME scheme is supporting up to $40 billion of lending to SMEs, building on the first phase of the scheme that was launched in March. The government has guaranteed 50 per cent of new loans issued by eligible lenders to SMEs.

The second phase commenced at the start of the month.

Under the scheme, fintech lender Finstro will offer eligible small businesses a specialist line of trade credit of up to $250,000.

The company has received an allocation that can be applied to all eligible clients signed up by the end of June next year.

Finstro chief product officer Tom Whitworth welcomed the government’s expansion of the scheme.

“Australia’s road out of the COVID-19 recession depends on the health of our small business community,” Mr Whitworth said.

As one of the largest credit forms used by SMEs in Australia, greater access to trade credit is critical to the country’s small business rebound, he said.

“Trade credit is a key tool of SME cashflow management and has become even more important in the face of COVID-19,” Mr Whitworth commented.

“As credit risk has increased within the SME market, many suppliers are reducing the trade terms they offer business clients and many small businesses have moved to cash-on-delivery, placing further pressure on cashflows.”

‘Fintech lenders have a vital role’

Finstro reported its clients usually seek out facility limits below the $250,000 mark, with Mr Whitworth expecting the fintech will as a result be able to assist a large number of SMEs.

He added fintech lenders will be uniquely positioned to provide necessary working capital to support businesses.

“Fintech lenders have a vital role to play in supporting SMEs through the pandemic and beyond. We are proud to be doing our part in helping the SME community,” Mr Whitworth said.