5 Ways The Government Are Helping Small Business
Being in small business is tough at the best of times, let alone being in business in 2020! As the Coronavirus begins to take its toll on small businesses across Australia, the Government has implemented measures to provide relief in the form of support packages and allowances. However, if you’re in a small business, you must take initiative to access this support and take advantage of it while it’s there, which we know a lot of small business owners and sole traders aren’t doing.
Many business owners, including sole traders, are unaware of all the support that is available to them and they’re missing out on money they are eligible to receive. Which is why we decided to write a blog on it so you can ensure you’re accessing all the support available to you.
No doubt you have heard about the JobKeeper Payments and hopefully already taking advantage of these already. We wrote a full blog on the JobKeeper Payment here which explains everything you need to know about how the government is providing employers with a $1,500/fortnight payment to subsidise each employee's wage, and how you can apply and access this support.
What some businesses don’t realise is that even though they may not have been eligible in the first month or so for the JobKeeper Payments, they must keep checking in to see if their eligibility has changed. If you’re unsure if you or your business is eligible for the JobKeeper payment, get in touch with your accountant ASAP so they can help you find out and stay on the ball for when you may become eligible. At this stage, the JobKeeper Payments will continue until the end of September 2020.
Access To Credit For Small Business
When things become tight, as a business owner you may begin to stress and worry that funds will soon run out. Thankfully, the Government is providing an exemption from responsible lending obligations for lenders providing credit to existing small business customers.
This means as a small business customer you can approach your lenders for new credit, for a credit limit increase, or credit variations and restructures. This temporary exemption means that small businesses can get access to credit quickly and efficiently.
If your business and its cashflow are in a dire situation and you’re unsure how you will make it to the end of next month. This exemption will help you access funds quickly to hopefully make it out the other end of this pandemic. Speak with your bank or lender to see if they can help you access this credit.
Coronavirus SME Guarantee Scheme
Furthermore to accessing credit, the Coronavirus SME Guarantee scheme has been developed to support small to medium enterprises where the Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital.
Through this scheme, lenders will be more willing to lend and it will also increase their ability to provide credit, allowing SMEs to access additional funding to support them through the next few months.
So how will these loans work? It will be available for small to medium enterprises with a turnover of up to $50 million. The Government will provide eligible lenders with a guarantee for loans with the following terms:
Total loan size of $250,000 per borrower max.
The loans will be up to 3 years.
There will be an initial 6 month repayment holiday.
The loans will be in the form of unsecured finance, so that borrowers don’t have to provide an asset as security for the loan.
Even better news with this scheme is that the Government is encouraging lenders to provide facilities to businesses that only have to be drawn if needed. This means that if you apply and get approved for a loan, but you don’t end up needing it or using it, no interest will be charged, but you will have the option to use it in the future if you need to, which then interest will be charged.
This will give you a strong safety net if things don’t return as quickly as you hope or your business takes a downturn but allows you to apply without the stress of having to repay a loan with interest which you may not end up needing.
Through the ATO, the Government is providing Cash Flow Boosts to eligible businesses in the form of credits on your activity statements. In basic terms, because they credit your activity account, the money you have been putting aside to pay your activity statement you will more or less be able to hold on to, injecting cash flow into your business. We wrote a full blog on this as well, which covers everything you need to know, what the eligibility criteria are, and how you can access this support. You can read the full blog here.
Supporting Apprentices & Trainees
If you are employing apprentices or trainees, you may be eligible for a 50% wage subsidy from the Government from January 1st - September 30, 2020. This subsidy is available to small businesses employing fewer than 20 employees who retain an apprentice or trainee. This subsidy is not only encouraging employers to retain their apprentices and trainees so they can continue in their chosen career, but it is also helping small businesses to have a strong workforce during & after the pandemic and reducing the pressure of wages on the business owner.
If any of the above support packages or schemes are something you haven’t heard of or looked into yet, but you think they will help you drastically during this economic pandemic, it’s important to take action now.
We understand a lot of business owners already have their hands full trying to keep their business afloat during these unprecedented times, which is why we have taken on the task of helping our clients manage and work their way through these different support packages. If you need a hand to get your head around these, find out if you're eligible or just want to hand everything over and have it sorted, get in touch with us today.
A lot of business owners have either put off applying for many of these because it’s too hard or hasn’t bothered because they don’t think they’re eligible. We can’t stress this enough, take the time to talk to your accountant and get on top of it all. It is not very often the Government is offering support as big as it is right now and it’s crucial you take advantage of everything you are eligible for because the future is still very uncertain.