Small to medium-sized businesses will be able to access government-guaranteed loans worth up to $1 million under a plan to drive investment.

Raising the cap from $250,000 to $1 million could benefit up to 3.5 million companies as the focus of the scheme switches from working capital to investment loans.

Loan tenures will be extended from three to five years under a program slated to run until June next year.

Treasurer Josh Frydenberg said businesses would be able to use the loans to buy machinery, purchase fit-outs or make other investments.

“If reflects the fact that small businesses are the backbone of our economy,” he told Sky News on Monday.

“They’re going to be a key part of our recovery.”

He said 15,500 businesses had been loaned $1.5 billion through the program, which is guaranteed 50-50 between the government and banks.

“We’re giving them access to more money at lower rates and for longer periods,” Mr Frydenberg told the Nine Network.

The measure is part of Thursday’s ‘mini-budget’, which will outline the future of JobKeeper wage subsidies and other coronavirus support.

Mr Frydenberg says the extensive document will look at the economic forecast for the coming years as Australia grapples with a pandemic-induced recession.