SYDNEY, July 20 (Reuters) - Australia will extend its coronavirus loan guarantee scheme for small businesses and increase the credit limit to up to A$1 million ($700,000) from A$250,000, Treasurer Josh Frydenberg said on Monday.
The expanded scheme, which will begin in October this year and run till June 2021, will also allow businesses with a turnover of under A$50 million to apply for loans to fund their investment plans.
Current rules allow businesses to use the loan only for working capital purposes.
"The next phase of the coronavirus small and medium enterprises guarantee scheme will help businesses move out of hibernation, successfully adapt to the new COVID-safe economy and invest for the future," Frydenberg said in a statement.
The government will continue to guarantee 50% of the loan and the repayment period has been increased to five years from three years.
Under the plan, banks also have the discretion to offer a repayment holiday period.
The pandemic has wreaked havoc on Australian economy and the government has pledged over A$160 billion ($112.00 billion), or 8% of GDP, in fiscal stimulus to shore up the economy.
Australia has been among the most successful countries in curbing the spread of the coronavirus but an outbreak in the state of Victoria has dimmed hopes of a faster and sharper economic recovery.
More than 15,600 businesses so far have applied for loans worth A$1.5 billion ($1.05 billion) in the first phase of the plan, which is due to end on Sept. 30, 2020, according to government estimates.
($1 = 1.4286 Australian dollars)