You will have 5 years to pay off the loan. You are not required to make repayments in the first 2 years. Generally, we will not charge interest during the first 2 years.
After 2 years from the date of approval of the loan you will need to begin monthly repayments of the outstanding balance. We will send you a repayment schedule in myIR, outlining the repayment dates and amounts required.
The annual interest rate is 3% once repayments start after 2 years.
If you make voluntary repayments in the first 2 years, your repayment plan will have lower required repayments.
If you want to change a repayment plan or you cannot meet a payment at any stage, please contact us as soon as possible to talk about your situation. Any missed payments are an event of default on the loan, meaning you may have to repay the loan in full right away, with any interest.
Other general rules that apply when you take out the loan
If you have a change of circumstances while you still have the loan, you need to contact us as soon as possible after the change.
Examples include:
- your business ceases or is sold
- your business is no longer viable
- you become insolvent
- you enter bankruptcy, liquidation or other creditor arrangement
- the nature of your business changes. For example the business changes from real estate agent to selling books.
If you apply for a loan with false or misleading information, or give us false or misleading information later, you may have to repay the loan in full right away, with interest. You could also be investigated for offences under the Crimes Act 1961.
Interest charges if you default on the loan
If we recall a loan because of an event of default, we'll charge a higher interest rate.
The balance of the principal loan amount (plus any standard interest) will have default interest calculated on it. The default interest is calculated daily. Default interest is the standard interest rate of 3% rate plus an additional amount and is calculated as follows:
Loan balance x [UOMI (use of money interest)* + Standard loan interest]
In this formula:
- loan balance includes principal and standard loan interest
- * UOMI underpayment rate.
Interest on overpayments and underpayments (UOMI)
Borrowing one more time
If you've had a loan and repaid it in full before the end of 2023, you may be able to borrow one more time. Your business or organisation will need to meet the eligibility criteria at the time you apply to re-borrow.
Your business or organisation will not be eligible for a top up loan or for a second loan if there was an event of default on a previous loan. This rule applies even if we're satisfied the default was not deliberate.
Your business or organisation is not eligible to draw down an amount that has already been repaid.
However, a top-up loan of $10,000 is available if you still have an active first loan (not fully repaid) that was applied for before 21 March 2022, provided you have not had a previous event of default and still meet the eligibility criteria. This top up loan is separate to the first loan and has its own repayment period and date from which interest applies, in other words - the first 2 years are interest free.
You have the option to draw down the maximum loan amount as a lump sum or opt to take the loan in up to 4 amounts (up to the maximum loan amount) which must be drawn down before 31 December 2023.
First 2 years interest-free
From 21 March 2022 the first 2 years of the loan will be interest-free. This change will apply to existing borrowers, provided there has not been any event of default on your SBCS loan.
For all new borrowers, this change automatically applied from 21 March 2022. If you choose to draw down the loan in up to 4 separate amounts (up to the maximum loan amount), the 2-year interest-free period begins from the date of your first drawdown.
Loans have an annual interest rate of 3% which applies after 2 years from the date of the loan contract.
If there is an event of default on your loan, you may have to repay the loan in full right away with any interest and default interest may be charged.
Interest on top up loans
Existing borrowers who apply for a top up loan will have 2 separate loans with 2 separate interest-free periods. For example, for the:
- existing SBCS loan, the interest free period applies 2 years from the date the loan was made available to you
- top up loan, the interest free period applies 2 years from the date the first drawdown of the top up loan was made available to you.
If you choose to receive the top up loan in up to 4 separate amounts (up to the maximum loan amount) instead of a single lump sum, the interest-free period starts from your first drawdown of the top up loan. Any further drawdowns do not create a new interest-free period.
Payment methods
You can make payments towards your SBCS loan using any of our repayment options, including direct debit. The tax type for Small Business Cashflow Scheme repayments is SBC.
Ways of paying
You can ask us to pay any tax refund towards your loan balance instead of paying it to you. If you'd like to do this, you'll need to contact us in myIR. Refunds may be used to pay off other tax debts first, if you have them.
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