Latest COVID-19 packages a lifeline to small businesses

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has welcomed the Federal Government’s latest support measures designed to see small businesses through the COVID-19 crisis.

The economic support package includes:

• Support for households including casuals, sole-traders, retirees and those on income support

• Assistance for businesses to keep people in a job

• Regulatory protection and financial support for businesses to stay in business

“The Federal Government has listened to the feedback we have provided and responded to the needs of small and family businesses accordingly,” she says.

“In particular, we support the measures extended to sole traders, which make up more than 60 per cent of Australia’s business community.

“Importantly, sole traders who experience a significant loss of income will be eligible for the coronavirus supplement and jobseeker payment which will assist them to continue working for the next six months."

The government is providing small and medium sized businesses that employ people with up to $100,000 (minimum payment of $20,000) to assist with outgoings so they can keep their doors open for as long as possible.

Also, people experiencing financial hardship can now access up to $10,000 of their superannuation this financial year and an extra $10,000 the year after without paying tax.

“The creation of the Coronavirus SME Guarantee Scheme will help businesses gain access to the working capital they need,” Carnell adds.

“We support the government’s pledge to guarantee 50 per cent of new loans issued by approved lenders.

“Ultimately, this package gives small and family businesses some breathing space until circumstances return to normal, which will play a critical role in their survival and the ability for our economy to bounce back.”

Additionally, the ACCC has allowed the Australian Banking Association (ABA) and banks to work together to implement a small business relief package.

The package includes a deferral of principal and interest repayments for all term loans and retail loans for six months, for small business customers with less than $3 million in total debt owed to credit providers.

 “The ACCC recognises the significant financial hardship many Australian small businesses and their staff are experiencing as a result of this unprecedented crisis,” ACCC Chair Rod Sims says.

“We recognise the urgency of this issue. We consider that this relief package will enable banks to quickly provide relief to impacted businesses, and allow them to keep employing their staff.

“Importantly, interim authorisation does not mean that individual banks can’t decide to offer more favourable and tailored terms to their small business customers experiencing financial hardship during these times.”

At the end of the deferral period businesses will not be required to pay the deferred interest in a lump sum. Either the term of the loan will be extended or the level of loan repayments will be increased.